If a person leans on their own understanding by rejecting anything that God has ever said, this verse applies. It's all or nothing. You are right in saying we are to be lead by the Spirit and not the carnal understanding of the law. On the other hand, if we are lead by the spirit, we will understand the truth of the law, for the carnal mind doesn't understand that the the law is still in effect the way God organically intended. Think about this, if the law is for the unsaved to lead them to Christ, why did God's patriarchs like Moses, David, Joshua, Caleb, Hezekiah, Ezra, and Nehemiah live by it? They all had faith in God, and were subject to the law. It is clear they were not carnal in their belief.
The Holy Spirit doesn't cause us to reject anything that God has ever said. The Holy Spirit causes us to understand the spiritual meaning of Gods Words. God is a Spirit. And those who worship Him must do it in Spirit and Truth.
If you were led by the Holy Spirit you would understand that you are not under the law, you are not subject to it and your only hope is the Lord Jesus Christ. ONLY meaning ONLY. Not Jesus Christ plus (put any of your religious rituals here). Thats what trusting in God with all your heart and not leaning on your own understanding means.