When noting the distinctions to be made between justification and sanctification, one can hardly do better than to go to Q.78 of the Westminster Larger Catechism:
Q. Wherein do justification and sanctification differ?
A. Although sanctification be inseparably joined with justification, yet they differ, in that God in justification imputes the righteousness of Christ; in sanctification his Spirit infuses grace, and enables to the exercise thereof; in the former, sin is pardoned; in the other, it is subdued: the one doth equally free all believers from the revenging wrath of God, and that perfectly in this life, that they never fall into condemnation; the other is neither equal in all, nor in this life perfect in any, but growing up to perfection.
In reading through the Compendium Theologiae Christianae by Johannes Wollebius, I came across an other fine description of the difference between these two parts of the ordo salutis:
XIII. Sanctification differs from justification:
I. In genus: the righteousness of sanctification is a quality, that of justification a relation.
II. in form; for (1) in justification faith is regarded as a hand that grasps the righteousness of Christ, in sanctification, as the principle and root of good works; (2) by justification, sin is taken away both as to guilt and as to punishment, by sanctification it is destroyed in its very existence; (3) in justification the righteousness of Christ is imputed to us, in sanctification a new and inherent righteousness is infused into us.
III. In degree; for justification is a single act, individual, complete, and equally affecting all who are justified, whereas sanctification is spread over a period of time, leading to perfection by degrees, and, in accordance with the diversity of the gifts of the Holy Spirit, shining more brightly in some than in others.
Cited from John W. Beardslee, ed. Reformed Dogmatics. Pgs. 173-74.
Would that our preaching and teaching might always observe this distinction!