The inner self still related to dream reality, while the body’s orientation and the body consciousness attained, as was intended, a great sense of physical adventure, curiosity, speculation, wonder—and so once again the inner self put a portion of its consciousness in a different parcel, so to speak.
As once it had formed the body consciousness, now it formed a physically attuned consciousness, a self whose desires and intents would be oriented in a way that, alone, the inner self could not be.
The inner self was too aware of its own multidimensionality, so in your terms it gave psychological birth to itself through the body in space and time. It knew itself as a physical creature.
The personality essence known as Seth, speaking through Jane Roberts describes the birth of the ego as a psychological structure and the impetus behind it's creation.