In Church Dogmatics IV/2 p499f. Barth deals with the relationship between justification (God's declaration that those who trust in Christ are righteous) and sanctification (God's separation of those who trust in Christ to be holy and live out holiness). It's one of the most practically important issues in theology, and one where I think we have a lot to learn.
Barth takes us back to Chalcedon, and the relationship between the two natures - divine and human - of Christ. The two natures are undivided but also unconfused. That is to say, they cannot be separated, but neither can they be merged. Christ's divinity is never without his humanity, and vice versa - but his divinity is not his humanity, and his humanity is not his divinity. For Barth this has direct bearing on the question of justification and sanctification, because the architecture of his doctrine of reconciliation works like this: Christ as the God who humbles himself is the justifier; Christ as the man who is exalted is the sanctifier. In his one action - which takes in his whole life, death, resurrection, and ascension - Jesus the God-man is Christ the justifier-sanctifier.
The dangers of confusing justification and sanctification exist on both sides. If justification is merged into sanctification, as Barth suggests occurs in much Roman Catholic teaching, then faith in Christ will disappear into the works of the Christian, and Christian confidence in the gift of righteousness given in Christ will be lost. If sanctification is merged into justification, the necessity of good works may be lost in a one-sided emphasis on the judicial verdict of God.
On the other hand, the danger of separating justification and sanctification looms on both sides. To think of justification without sanctification is to imagine that God's declaration of righteousness does not actually lead to holiness; it thus imagines a strange asymmetry in God's work. A God on the one hand concerned with righteousness to the point of giving his Son is on the other hand unconcerned with human behaviour. But to think of sanctification without justification is to think an impossibility, since sanctification means walking in confident obedience before God, and this simply cannot be without a firm assurance springing from the verdict of righteousness pronounced in Jesus. How, after all, could I be joyfully obedient when even my obedience is so obviously inadequate?
I think probably the great danger in the sorts of churches I know is that justification and sanctification are both preached, but they are preached in isolation. My observation is that the gospel is often taken to mean justification, whilst sanctification is perhaps thought of as a more or less distant consequence of the gospel. In practice, that means that when we preach obedience it often seems disconnected from the gospel. It is not then surprising that some in our churches treat any preaching of the need for action as legalism and anti-gospel, because of course even the right preaching of the right actions is indeed anti-gospel in so far as it proceeds from an autonomous principle of obedience rather than the gospel.
The answer, I think, is to see with Barth that justification and sanctification are one in Christ, both achieved by him in his life, death, resurrection, and ascension. This means talking about Jesus as much when we are discussing the need for, and motivation and power for, human obedience as we do when we are discussing the gift of righteousness.