God's law was intended to help humans live the kind of life and to have the kind of community that God wanted them to have. God's law outlined for them how to have the right relationship with God. Yet, being humans, they didn't do so well.
God has a new plan: Christ Jesus. "Those of you who cannot comply with the old law are not required to try. God's Son has dealt with sin. Life in the Spirit of Christ serves as compliance."
Eugene Boring and Fred Craddock, in The People's New Testament Commentary, suggest reading Deuteronomy 30 to remind ourselves of the life-giving original function of the law. They are also helpful in pointing out that the word that the NRSV translates as "flesh" refers to human life as a whole, rather than being limited only to our "lower nature," as translated by the NIV.
We English speakers read "You are not in the flesh; you are in the Spirit," and think "He's talking about me. He's making promises to me about my life." Well, so he is, but he's talking to the me that is part of us. The Greek pronoun translated as you is in the plural. Paul is talking to the Christian community. "Church, you're not in the flesh. Church, the Spirit of God dwells in you. Church, God's breath gives you life."