The second half of Romans 7 is such an important passage in the context of what is being disclosed in the Little Book of Providence that I will quote directly from the book** in this instance. It contains an amplified version of the passage in question and shows how I believe Augustine and later interpreters have misunderstood it.
“Pauline anthropology and its moral outworking
The moral predicament especially for those outside the Church concerns their inherited disordered nature and the struggle the unaided human’s spirit has in controlling it. The non-Christian’s plight is best summed up by Paul in this passage in Romans, which I have amplified in brackets for it is at the heart of misunderstandings concerning the human condition:
For we know that the law (of God – implanted in the spirit and referenced by the conscience) is spiritual but I am fleshly sold into bondage of sin. For what I am doing I scarcely comprehend: for I am not practicing what I would like to do but I am doing the very thing I hate. But if I do the very thing I do not want to do, I agree with the law, acknowledging that the law is good. So it is no longer I who am really doing it, but sin which dwells in me. For I know that nothing good dwells in me, that is, in my flesh – for the willing (to do good) is present in me, but the doing of the good is not: for the good that I want to do I fail to do; rather I practice the very evil which I do not want to do. But if I am doing the very thing I do not want, I (i.e. my soul/spirit) am not the one really doing it, but the sin that dwells in me (i.e. in my flesh). I find then the principle that evil is present in me (being) the one who wants to do good (showing at heart I am a good person), for I joyfully concur with the law of God in my inner man (affirmed by my conscience and the peace I receive when I do what is right), but I see a different law (the triple concupiscence) in the members of my body (as their senses are processed through the brain) waging war against the law in my mind (referenced by the conscience) and making me a prisoner of the law of sin which is in my members. Wretched man that I am; WHO WILL SET ME FROM THE BODY OF THIS DEATH? Thanks be to God (it is) through Jesus Christ our Lord! So then, on the one hand I myself with my mind (i.e. my eternal psyche) am serving the law of God, but on the other, with my flesh the law of sin [Rom7:14-25 from Greek with my amplifications in brackets]
Commenting on this crucial passage in his autobiographical “Confessions”, Augustine is either being woefully inept or deviously subtle, the reader must decide which: [I have highlighted the phrases that contradict each other]
“For though a man be delighted with the law of God according to the inward man, what shall he do about that other law in his members, “fighting against the law in his mind” and captivating him in the law of sin that is in his members? Thou art just O Lord but we have sinned, we have committed iniquity, we have done wickedly and thy hand has grown heavily upon us and we are justly delivered over to that first sinner, the ruler of death, because he (Satan) turned our will to the likeness of his will, whereby he stood not in thy truth [Augustine’s “Confessions” Book VII Chapter 21 
On the credit side, Augustine, unlike many later commentators does not try to make a case that the Romans chapter 7 passage was referring to Paul as a Christian (contradicted absolutely by chapter 8 – below), the apostle is speaking of man by nature. But then observe Augustine’s outrageous conclusions – that it follows from Paul’s statement that mankind’s will has been conformed to that of Satan – as if the devil would ever delight in God’s law in his inner being. If man’s will had been turned to that of Satan’s, then it could never be “free” (as the earlier Fathers unanimously understood) but could only ever choose what is evil. Unlike Paul’s depiction there is no inner conflict in Satan’s mind, he is hateful at heart and unrestrained in his evil pursuits. Man, even in his fallen state is not. Satan and natural man are therefore quite different in nature, for the one has a living spirit referenced by a conscience, the other does not.
In terms of the more usual misrepresentation of this passage as referring to the Christian, Paul goes on in chapter 8 to confirm that the inability to practice what is right through enslavement to the opposing law of the “body of this death” is categorically not the state of affairs for the Christian, who is divinely enabled such that he is “not living in accordance with the flesh but in accordance with the spirit” (Rom8:40). Paul says at the start of the passage being considered that the person he was depicting as himself was “in bondage to sin”: he therefore cannot be referring to the Christian – it is man by nature. For –
You (Christians) however live not by the flesh but by the spirit since the Spirit of God has made a home in you (Rom8:9)
Clearly, the person the apostle depicts as himself in the passage is living by the flesh: he desires good but consistently fails to practice it because he gives in to the lusts of the body and practices what is evil. That assuredly is not the Apostle Paul or else he would be contradicting his own teaching that any who do live in such a way shall die (verse below). With the help of the Holy Spirit, any Christian (let alone Paul) can and should gain the victory:
We have no obligation to the flesh to be dominated by it. If you do live in such a way you shall die, but if by the spirit you put to death the habits originating in the body, you will have Life (Rom8:12-13)
[Excerpt from The Little Book of Providence – chapter 3]
I am bound to return to this subject for it also reaffirms what I indicated in recent posts that whilst Christian salvation does pertain to the healing of the soul, it is not the God-given soul, spirit or “inner man” that is the source of fallen man’s moral degradation – it is the procreated intellectual vessel with which the soul (more precisely the spirit) is associated at birth (Ps51:5), being Paul’s “body of this death”. As Scripture goes on to affirm, when the body dies “the dust will return to the earth as it was and the spirit will return to God WHO GAVE IT” (Eccles12:7NKJV).
So there is a sense in which human sinfulness is a temporary problem resolved by physical death (which is why man’s life span was shortened for his own benefit – Gen6:3 cf. Hebrew). But the problem is potentially more enduring. For referring more inclusively to the soul rather than the spirit (often confused with the Holy Spirit in Paul’s writings), the Apostle Peter confirms that the impurities of the flesh WAR AGAINST the human soul (1Pet2:11). Notice how the flesh and the spiritual essence of the soul are pitted against each other – and it is the same in those verses in which Paul contrasts flesh with spirit or exhorts the spirit to “put to death the deeds of the body”. It is not the Holy Spirit he is directly referring to but the human spirit or “inner man” as in the featured passage. As with any conflict, damage can be inflicted, and “fleshly passions” can and do corrupt the soul. Still more importantly they disrupt an individual’s relationship with God, which is what Paul and the Bible more generally mean by death. That is as opposed to eternal life: For THIS is eternal life, that they might know You the only true God and Jesus Christ whom You have sent” (Jn17:3).
This is why a remedy was needed for those who were to relate to God and His Christ whilst still in human flesh. It is so their souls could be progressively healed and fitted for future glory. In their case the forensic benefits of Christ’s atonement (pardon for sin), provided to the many, do not suffice. God’s elect need the power of sanctifying grace in order to serve God now in spirit and in truth. As we have seen from Paul’s earlier teaching in Romans, such is freely provided to those who “having been reconciled to God by Christ’s death, are to be saved by participating in His Life” (Rom5:10)
** Free PDF HERE