There's a debate in theological circles about what it means to be "united with Christ", and it intersects with covenant theology. I'll try to summarise the debate - I hope I don't distort either position - sorry if I do. 
Classic covenant theology states that being "in Christ" is a faith-union. When we put our trust in Jesus, he takes the punishment we deserve, and we receive the reward he deserves. This faith-union is grounded in God's electing purposes - he predestines those to whom he will give the gift of faith, whereby they will be united to Christ. But the actual union happens when the believer, under the convicting power of the Spirit, puts their trust in Jesus' death and resurrection. It is therefore focused on the cross and resurrection. 
My preferred solution is to stick with the classic covenantal view, but within that, to highlight Christ as the object of faith, faith as only an instrument of salvation, and predestination as an outworking of God's purposefulness. What's important is to be united with Christ: he's the object of our faith; he's the one who's done everything we need to be reconciled to God. We're united with him by faith, but that faith is a mere instrument - it's not the object, we don't have "faith in our faith". What really matters is not the strength of our faith, but the strength of the Jesus we have our faith in. Even a weak, trembling faith in the real Jesus will achieve it's goal - reconcile us to God - because even if our faith is weak, our Jesus is strong. As for predestination: God, in his secret purposes, has chosen to give this reconciling faith to some, but not all. The rest, he "passes by" (Westminster Confession, chapter 3 section 7), still respecting them as free, responsible persons, and holds them accountable for rejecting him. So, we shouldn't turn ourselves inside out trying to discern whether we have true faith, whether we're predestined, etc. We should simply praise the glorious mercy of God, who draws us to himself in Christ.
To be "united with Christ" is to have a share in his benefits - to be able to say with confidence, "I have received the benefits of Jesus' death and resurrection". So it's synonymous with "being saved". There's too many passages for me to list them all - do a concordance search some time - but some good ones are Rom 8:1; 1 Cor 1:30; Eph 1:13; Hebrews 3:14; 1 Peter 5:10, 14.
Classic covenant theology states that being "in Christ" is a faith-union. When we put our trust in Jesus, he takes the punishment we deserve, and we receive the reward he deserves. This faith-union is grounded in God's electing purposes - he predestines those to whom he will give the gift of faith, whereby they will be united to Christ. But the actual union happens when the believer, under the convicting power of the Spirit, puts their trust in Jesus' death and resurrection. It is therefore focused on the cross and resurrection. Neo-orthodox theology states union with Christ is an ontological union. It is focused on the incarnation, where the divine Son of God became human, and thereby united humanity with divinity.
Neo-orthodoxy criticises covenant theology as removing the basis of a believer's assurance. If our union with Christ is dependent upon God's predestination, then can we ever be sure we're saved? Also, it criticises covenant theology for making people focus on their subjective faith, rather than Christ's objective atonement. Only the elect have faith - I have faith - that must mean I'm elect. Hang on - that puts the focus on you, not Jesus! Neo-orthodoxy claims to restore the focus on Jesus, who is the elect one.
I agree that predestination, and the place of faith, are two tension points within covenant theology. However, I think this is because they're Biblical problems - they're tension points within the Bible itself. Furthermore, I think the neo-orthodox solution causes more problems than it solves - and these problems are un-Biblical. The neo-orthodox theological system (and here's where I hope I'm not over-generalising) is, I think, necessarily universalistic. If, in the incarnation, God took not just a human - Jesus of Nazareth - but all humanity into himself, then how can anyone not be saved? Most neo-orthodox theologians don't go this far; probably because they hold the Bible closer than their theological system - which is how it should be!
My preferred solution is to stick with the classic covenantal view, but within that, to highlight Christ as the object of faith, faith as only an instrument of salvation, and predestination as an outworking of God's purposefulness. What's important is to be united with Christ: he's the object of our faith; he's the one who's done everything we need to be reconciled to God. We're united with him by faith, but that faith is a mere instrument - it's not the object, we don't have "faith in our faith". What really matters is not the strength of our faith, but the strength of the Jesus we have our faith in. Even a weak, trembling faith in the real Jesus will achieve it's goal - reconcile us to God - because even if our faith is weak, our Jesus is strong. As for predestination: God, in his secret purposes, has chosen to give this reconciling faith to some, but not all. The rest, he "passes by" (Westminster Confession, chapter 3 section 7), still respecting them as free, responsible persons, and holds them accountable for rejecting him. So, we shouldn't turn ourselves inside out trying to discern whether we have true faith, whether we're predestined, etc. We should simply praise the glorious mercy of God, who draws us to himself in Christ. I hope this maintains all the good things of the neo-orthodox view of Christ as the elect one, and the covenantal significance of faith-union with Christ, and avoids the dangers of over-systematisation in either direction. Incidentally, I don't think I'm saying anything that different from Calvin - am I?
This concludes my series on Covenant Theology. It's time I moved on to something a little less - ah - geeky. What will that be? Watch this space...
Comments
I found an article by Timothy Dearborn [1] quite helpful if you want to think along the ontological path. He points to the work of the Spirit in bringing us into the humanity of Christ. Of course, he has to develop a new category of 'onto-relational' participation but I remember liking the description when I read it in 2nd year.
I should note that the article is directed towards the question of God's pre-creation election of Christians and I'm not certain what it offers would satisfy both sides of the debate. But I still liked his description.
Best wishes,
Russell
[1] Timothy A. Dearborn, 'God, Grace and Salvation' in Christ in our Place: The Humanity of God in Christ for the Reconciliation of the World (Trevor A. Hart and Daniel P. Thimell; Exeter: Paternoster, 1989) 265–93.