There's a balance. No, in God's sight you're not back to square 1. The Spirit is sealed with you (Ep 1:13). That is God-in-you. You don't lose that through sinful actions. Were that true, Paul wouldn't be right to say, "
Let me ask you only this: Did you receive the Spirit by works of the law or by hearing with faith? Are you so foolish? Having begun by the Spirit, are you now being perfected by the flesh?" Gal 3:2-3 And maybe we just need to quote Paul more often.
That's the objective situation. However, we can ignore God even when He's in us, and He is perfectly capable of disciplining us, inside & out. We can lose gifts; we can lose assurance; we can lose an outward reputation. These things aren't saving us, so God is free to do quite a bit to get us back in line. Westminster puts it this way:
True believers may have the assurance of their salvation divers ways shaken, diminished, and intermitted; as, by negligence in preserving of it, by falling into some special sin which wounds the conscience and grieves the Spirit; by some sudden or vehement temptation, by God's withdrawing the light of His countenance, and suffering even such as fear Him to walk in darkness and to have no light: yet are they never so utterly destitute of that seed of God, and life of faith, that love of Christ and the brethren, that sincerity of heart, and conscience of duty, out of which, by the operation of the Spirit, this assurance may, in due time, be revived; and by the which, in the mean time, they are supported from utter despair.
God can seem to disappear if you close your eyes or turn out the lights. But He's still there.