God did not need to create man, yet he created us for his own glory (Isa.43:7; Eph. 1:11-12). The fact that man is in the image of God means that man is like God and represents God (Gen 1:26). Likeness refers to something that is similar but not identical to the thing it represents.
Being in the image of God is shown through moral aspects— we are morally accountable to God, spiritual aspects—we have not only physical bodies but also immaterial spirits and mental aspects— having the ability to reason and think logically. In all, we represent God by being human.
The image of God in us is distorted; we are less fully like God than we were before the entrance of sin (Gen 9:6). Since man has sinned, he is certainly not as fully like God as he was before. In every aspect of life some parts of that image has been distorted.
The sin spoken of does not refer to Adam’s first sin, but to the guilt and tendency to sin with which we are born. It is “original” in that it comes from Adam, and it is also original in that we have it from the beginning of our existence as persons, but it is still our sin, not Adam’s sin (Rom 5:12-21).