Indeed 'created in His image' would seem to be at odds with 'intrinsically bad'.

I didn't say "born holy" but if you kindly turn to Genesis you can see how the first man and woman were CREATED in Original Holiness (and Solitude, Justice, Unity).

Original sin is a deprivation of these positive qualities. Mary, for example, preserved in holiness, not simply cleansed of it. Holiness is our natural state, and so baptism returns us to that preternatural holiness that Adam enjoyed when he walked with God in the Garden.

The total in TULIP's "total depravity" is not a measure of sinfulness. It is not meant to imply that we are naturally as evil as possible in every context. The "total" is speaking in terms of the extent of depravity. That is to say, sin touches and influences every aspect of our existence. So that even in good works with the best of intentions humanly possible, there still exists an element of self exalting corruption.