This is a tricky essay to read, in part because a large part of the essay is devoted to the task of differentiating Schelling's nuanced (but still fairly broad-strokes) account of the nature of human freedom from a number of other positions, not all of which have similar aims. At the same time, the essay is well worth the effort, both for the insight it gives into how to think the unthinkable and the non-rational, and for the influence of this essay on a wide range of thinkers such as Nietzsche, Freud (probably indirectly), Heidegger and Derrida.
The easiest way into the Inquiries is to notice that Schelling thinks of himself as continuing the tradition of transcendental philosophy that was inaugurated by Kant and pursued by Schelling's ally Fichte, but that unlike both Schelling is clearly engaged in a transcendental metaphysics: an inquiry not merely into what we must think (or what we are permitted to posit) in order to think freedom but into what the ultimate nature of reality must be like in order for freedom to possible. Schelling's novel insight is that freedom is only possible on the condition of good and evil -- that freedom has to be something more than mere indifference but must in some sense represent the possibility of a real choice with moral weight, choice that arises out of a situation in which we are tempted by evil but able to choose good. So, the question regarding freedom becomes a question regarding what we must think about the ultimate nature of reality in order to account for the possibility of good and evil. Here Schelling is happy to call what I have described as the ultimate nature of reality "God," but we should recognize that his term is conceived broadly enough to be open both to a Spinozistic -- God as Nature -- as well as a Theistic -- God as absolutely good and all powerful -- account. Probably the best simple formulation for what Schelling means by God is "the self-revealing substance" -- a formulation that is both clearly linked to Spinoza and to Christian theology.
Schelling carefully shows that freedom is inconsistent with a mechanistic conception of reality (which is at least part of what you find in Spinoza, though Schelling aims here also to revive the Spinozistic tradition from the contemporary challenges that had been levelled against it) but that it is equally incompatible with a traditional Theistic account, since that leaves no room for the possibility of evil, as well as a Gnostic account that makes good and evil into a dualistic opposition, since that leaves no room for real choice between them. Evil is not a positive reality opposed to good, but exists as a permanent possibility rooted in the reality from which emerges the good. Insofar as reality is understood as having the potential to give rise to order, unity, life, consciousness and freedom, it must also contain the potential for dissolution, chaos, death, annihilation and disease. This potential is not per se evil, but is manifest as evil insofar as the struggle towards the overcoming of irrationality and dissolution is a real struggle that can never be finally won. What Schelling calls the dark principle (the entropic tendency of matter to clump indifferently and dissolve patterning against the tendency towards spontaneous growth and the birth of order; the sluggishness of life; the tendency of ego to define itself over and against rather than with and in relation to others), this dark principle is a permanent possibility that breaks down and resists the formation of unity and community.