Okay, let's start this...
At the heart of the dividing line between the Protestant and Catholic belief systems is the question of how man is made righteous before God. Both sides recognize that we, as human beings, are sinful, and that our sin needs to be atoned for in order for us to be justified in God's sight; however, they differ greatly in their views of precisely how this justification is obtained.
It seems that Bob Dylan might be a Protestant:
You can't get to glory by the raising and the lowering of no flag.
Put your goodness next to God's and it comes out like a filthy rag.
In a city of darkness there's no need of the sun
And there ain't no man righteous, no not one.
-"Ain't No Man Righteous (No Not One)"
Why do I say that I think Dylan is a Protestant based on these lyrics? Well, he's alluding to Isaiah 64:6 when he compares our goodness and God's goodness ("We have all become like one who is unclean, and all our righteous deeds are like a polluted garment."), and to Psalm 14:1-3 and Romans 3:10-12 when he declares that no man is righteous ("As it is written: 'None is righteous, no, not one; no one understands; no one seeks for God. All have turned aside; together they have become worthless; no one does good, not even one.' ").
But don't both Catholics and Protestants believe this? What's the problem, then? Well, to understand the full effects of the truths of these verses, we need to understand how the Bible presents the concepts of original sin, justification, and sanctification.
The term "original sin" means that, since the fall of mankind to sin, we humans - as descendants of Adam - are no longer born holy, righteous, without sin. More than that, we are not even born morally neutral! Rather, we are born in a state of sin (Psalm 51:5) and, as an entire race, are condemned and justifiably under God's holy wrath. Paul states clearly this condition of our inevitable condemnation in Romans 5:18-19. However, in the same breath, intertwined in those very same sentences, he gives a hope for us condemned sinners, the righteous life of Christ:
Therefore, as through one man's offense judgment came to all men, resulting in condemnation, even so through one Man's righteous act the free gift came to all men, resulting in justification of life. For as by one man's disobedience many were made sinners, so also by one Man's obedience many will be made righteous.
The importance of recognizing the truth of original sin for the full understanding our own justification is found in the fact that, as the Bible teaches the hopelessness of man's condition (if left to himself!), it shows us that man can do nothing to bring himself to righteousness, to justify himself in God's sight. God requires perfect holiness - not just our best effort! - in order to proclaim a human being as righteous. I will say it again: God requires perfect holiness, not a single drop of sin, to proclaim a person to be righteous. If we are born in sin, condemned by the fall of Adam, we cannot, absolutely cannot have this righteousness on our own! Therefore, if we cannot justify ourselves, then it must be God who justifies (Romans 8:33), and He must justify on the basis of something outside of us, since He requires an absolutely perfect holiness for the atonement of sin, and such a holiness cannot be found in any one of us.
A couple more verses to ponder over:
Do not enter into judgment
with your servant,
For in Your sight no one
living is righteous.
-Psalm 143:2
"Why do you call me good?" Jesus answered. "No one is good – except God alone."
-Luke 18:19
Relevant to the discussion of original sin and justification is sanctification. This term refers to the very real life transformation that every Christian begins experiencing from the very moment that they believe upon the atoning sacrifice of Jesus Christ for their sins. This is an ongoing process of conforming us to "the image of the Son" (Romans 8:29) that enables us to turn from sin and, through the power of the Holy Spirit, begin living a life that glorifies Christ. However, this process is not perfect: sanctification does not make us perfect like Christ is perfect. Rather, it is a word (which means, literally, "to set apart") given for the very gradual process by which we are given the power to choose holiness over sinfulness... but it will not be perfected in this life. We cannot become perfect beings who never commit sin while we are still living on this earth, in these bodies.
I stress this point of understanding the Biblical definition of sanctification (Paul makes his stance on this matter very clear in his epistle to the Romans, if you would like to know more) because there are many who seem to confuse sanctification with justification, or will even collapse the two categories into one. The latter is the stance that the Roman Catholic church takes, which I do not believe is Biblically sound. Justification and sanctification are two very different things that happen in the Christian life! Rome would have us believe that we are justified not only by the atoning sacrifice of Christ, but also by a life-long process of sanctification. I believe that this is simply not true, and that it is not supported in the Bible*. Our sanctification is the fruit of our justification, it is not the basis for our justification! Justification will inevitably lead to sanctification, but sanctification can absolutely never lead to justification.
If we are to believe that the Bible teaches that no man is righteous, that God demands an entire life of perfect living in order to justify, and that what semblance of righteousness that man might have within himself is as filthy rags in the sight of God, then we must concede that man cannot be justified on the basis of something that God might see inside of him. This point leads me to the Biblical teaching that our righteousness is not based on works, which I will discuss in the next part.
*There are some texts which have been used to support the idea of justification based on human works, but I will discuss this later.