In Naive Set Theory, Paul Halmos introduces an arbitrary set $A$ and another set $B = \lbrace{x \in A: x \notin x \rbrace}$. He then asserts that $B \notin A$ because $B \in A$ implies $B \in B$ or $B \notin B$, both of which lead to a contradiction.
My question is how does $B \notin A$ resolve the contradiction? It seems to me that no matter what the condition is, a set is either in another set or not: if $B \notin A$, it still follows that either $B \in B$ or $B \notin B$.
Note: the fact that,
$(*)$ for all $y$, $y \in B$ if and only if ($y \in A$ and $y \notin y$)
is also given as a consequence of the definition of $B$.