The Indiana appeals court is right when it says those “born in the allegiance of the United States natural-born citizens.” Obama, being born to a foreign national, was not born in the allegiance of the United States. This is probably why that same court avoided saying that Obama is a natural born citizen.
The Indiana Court asserted a very broad rule. I believe the Court got the law wrong (that happens frequently), but it said this:
Based upon the language of Article II, Section 1, Clause 4 and the guidance provided by Wong Kim Ark, we conclude that persons born within the borders of the United States are "natural born Citizens" for Article II, Section 1 purposes, regardless of the citizenship of their parents. Just as a person "born within the British dominions [was] a natural-born British subject" at the time of the framing of the U.S. Constitution, so too were those "born in the allegiance of the United States [] natural-born citizens." FN15FN15 - We reiterate that we do not address the question of natural born citizen status for persons who became United States citizens at birth by virtue of being born of United States citizen parents, despite the fact that they were born abroad. That question was not properly presented to this court. Without addressing the question, however, we note that nothing in our opinion today should be understood to hold that being born within the fifty United States is the only way one can receive natural born citizen status.