OK, but what I believe Daryl is asking is, how can the expression "sin which dwells in me" refer to a born-again believer in whom the Spirit dwells? How can both dwell in the same person?

Again, there is a difference between sin and sinning. The Holy Spirit, according to the Bible and the SOP, cannot dwell in people who are willfully sinning. The fact they have a sinful flesh nature does not prevent the Holy Spirit from dwelling in them if they are abiding in Jesus and subjecting it to a sanctified will and mind.

Neither the Bible nor the EGW writings make any difference between sin and sinning. "Sin" is the transgression of the law.
Sin extends to our affections. Not loving God above all else, caring first about ourselves, this is the essence of sin, of our sinful tendencies. And this is a transgression of the first commandment.

The SOP makes it clear sinful flesh nature cannot sin. It can only tempt people from within to sin. Here's the quote:

The lower passions have their seat in the body and work through it. The words "flesh" or "fleshly" or "carnal lusts" embrace the lower, corrupt nature; the flesh of itself cannot act contrary to the will of God. We are commanded to crucify the flesh, with the affections and lusts. How shall we do it? Shall we inflict pain on the body? No; but put to death the temptation to sin. The corrupt thought is to be expelled. Every thought is to be brought into captivity to Jesus Christ. All animal propensities are to be subjected to the higher powers of the soul. The love of God must reign supreme; Christ must occupy an undivided throne. Our bodies are to be regarded as His purchased possession. The members of the body are to become the instruments of righteousness. {AH 127.2}

What she means is that the body cannot sin. Of course "the lower, corrupt nature" can and does sin.

She cites the "affections and lusts ... corrupt thoughts ... animal propensities" generated and communicated to our conscious mind by sinful flesh and labels them "temptation to sin" which must be "subjected to the higher powers" and "brought into captivity to Jesus" so that the "members of the body" can be employed as "instruments of righteousness" rather than being slaves of sin, self, and Satan. Again, fallen flesh nature cannot commit a sin - it can only tempt us from within to sin, to satisfy our innocent and legitimate needs in sinful ways. In Christ we are free to partake of the divine nature which empowers us to satisfy our innocent and legitimate needs in godly ways that honor and glorify God our Father.