Having believed in Jesus Christ, Christians are already designated as righteous, however, that righteousness is not yet perfected, but will be perfected at the resurrection.
Prior to faith in Christ, which is prior to ones salvation, evil had rule over body and soul.
When Christ went to the cross, He paid the price, and defeated both sin and death.
In order to obtain freedom from sin and death, the individual must believe in Christ, and by that faith, identifies with Christ in his work on the cross, which is to say His death, burial, and resurrection.
Even though we are saved, we still live in this world, in our physical bodies, which are still chained, so to speak, to the sin nature. And as such, we have a war within us, between good and evil.
Paul describes that battle in this and the next several verses.
That which I do, is a reference to the evil that we do. I allowed not, refers to our preference to not do evil. In other words, I don’t want to do evil, but I do it anyway.
In the next phrase, for what I would, refers to what I prefer to do, namely good, I do not do.
In the final phrase of this verse, demonstrates the trap that we are in, while living within these physical bodies. And that final phrase simply means that we do evil even though we don’t want to do evil.
In the summary of this verse, is that, though we have a preference to do good, we have a tendency to do evil.
The whole point of this, is to demonstrate that sin and evil have power and authority and control over us. And we cannot escape that power and authority on our own.
As unbelievers, there is no resource to get away from sin and evil and death.
As believers, Bible doctrine is a resource to help us neutralize sin and evil in our life, but we will not fully escape its influence until the resurrection, or until our physical death, wherein we leave the physical body behind, and enter into heaven, thus leaving the sin nature behind, and eventually being restored to a resurrection body, which is incorruptible and eternal.
While we are here in this world, we have to put up with the bad, so to speak. But we have Bible doctrine to help us endure in that process.
And needless to say, if we lack Bible doctrine, because we have not learned it, then life will be just that much more miserable for us, due to lack of resources, namely Bible doctrine.