These two phrases share similar meanings. The phrase, "he is a Jew who is one inwardly" explains the metaphor "circumcision is that of the heart." (See: [[rc://en/ta/man/translate/figs-parallelism]])
This refers to the values and motivations of the person whom God has transformed.
## in the spirit ##
This probably refers to the internal, spiritual part of a person, in contrast to the outward "letter" of the Law. However, it is also possible that it refers to the Holy Spirit (see UDB).
A “letter” is the smallest part of written language. Here it refers to written Scripture. AT: “through the work of the Holy Spirit, not because you know the scriptures” (See: [[rc://en/ta/man/translate/figs-synecdoche]])