Hey James

, I think what may not be crossing your mind is the point why a person shouldn't be sin-conscious. It isn't so that they walk in some form of lawlessness and it isn't to say that we aren't aware of right and wrong. Rather, it is a renewing of the mind to walk righteously. "Awake to righteousness and sin not."
It is getting your eyes off of your faults and stating the spiritual reality in faith so that it may manifest in reality. You, me, and everyone here (whom are Christians) are dead to sin, "reckon yourselves dead to sin." So, while we may know we have just sinned, it doesn't boggle us down. It doesn't heap condemnation on us. It doesn't make us feel condemned in our hearts and affect our confidence before the Lord. No, we are the righteousness of God, in Christ. He has imputed His righteousness to us and so walk out who He says you are.
To be sin-conscious puts your focus on something that doesn't define you. You have placed faith in Christ, and He has imputed His righteousness to you. Your focus is on Christ, and what He says about you, regardless of your circumstance. It is faith. Its like the person standing in faith for their healing based upon Christ's sacrifice, it is done spiritually and it only needs to manifest in reality, regardless of what symptoms surround them. In the same way you may sin, and yet you continue to be a saint in God's eye because of Jesus Christ. Your sin doesn't define you, Christ does.