Excellent blog and discussion!
Here is how I understand it. When we hear the Word of God (whether it is preached, shared, or read), His Holy Spirit contends with us drawing us to Him, by His power we are convicted of our sin and by that same power we are given the faith necessary for us to receive Him. This is when He stands at the door of our heart and knocks. When we in humility and contrition accept His prompting, thereby opening the door of our heart, He enters and sups with us, His Holy Spirit fills us and gives us the faith to accept Him confessing our sins with a repentant heart, acknowledging Him as Lord and Saviour. At that point, our "old man", dead in sin is put to death, falling like a seed to the ground, dying to burst forth with new life and the "new man" is reborn, covered by the blood of Christ, justified and no longer carnal in the sight of God. This is the rebirth by the Spirit that Christ speaks of to Nicodemus and we are born again. This is what we call justification by faith.
From that point forth, His Holy Spirit dwells in us, teaching, counseling, and convicting us. From that point many things that we used to do in the former carnal man are no longer palatable or agreeable. This does not mean that our sin nature is obliterated, it simply means that our carnal minds begin to change. This is the first sign of our sanctification, the beginning of the renewal of our minds. I have experienced this myself and I have seen it in those whom I work with. This too is the work of the Lord through the Holy Spirit that dwells in us. When we acknowledge that by our our strength and will, we are unable to fully comply with the prompting and conviction of the Spirit and surrender our will to Him relying on Him to empower and change us, we begin our journey in sanctification. As we walk in obedience and humility relying on Him to work in us and to empower us, presenting our bodies as living sacrifices, our minds are renewed in increasing degree of holiness and with it our walk is empowered. With each surrender, we gain successive victory over our sin nature and the desires of our heart become His desires. Through it all, though our sin nature still lives, in God's eyes, the covering of Christ guarantees our righteousness in the eyes of God. With each surrender our sin nature looses its hold on us. Does God remove that sin nature? No, our sin nature will always be there even though it will gradually loose its hold. Is it instantaneous? In some areas of our lives yes, in some, no. I have always been amazed at how God works with the addicts I work with, some loose their urge and need for drugs almost instantaneously, some just suddenly develop an instant aversion for their addiction, others more gradually, each according to God's perfect knowledge of the person in question. So it is with me. Do we have to cling to Him daily? Yes, whenever I do not take the time to be in the Word and in prayer, my sin nature which lurks like a lion just outside pounces and I find myself slipping. What I, in my pride thought I had conquered resurfaces rearing its ugly head. It is only when I heed the Holy Spirit and in humble obedience return that I am once more empowered and my sanctification continues. I suspect, for me at least, my sanctification will continue till I no longer draw breath in this form and stand before my Lord in heaven.