In his De Anima Aristotle writes the famous sentence οὐ γὰρ ὁ λίθος ἐν τῇ ψυχῇ, άλλὰ τὸ εἶδος ("The stone, namely, is not in the psyche, but the sight;"· III viii 432a1). It seems obvious that the stone is not in the psyche, doesn't it? But look closer. The conventional translation of εἶδος (_eidos_) is 'form', rather than 'sight'. 'Sight' or 'look' is preferred here because εἶδος means literally 'that which is seen', from ἰδεῖν, 'to see'. The kind of seeing here is psychic-mental seeing. Is there any other kind of seeing for us humans who, for Aristotle, are cast as a kind of animal (ζῷον)? For Aristotle, the psyche (soul or anima) has two kinds of openness for the world: sense perception (αἴσθησις) and mental understanding (νόησις). Sense perception for Aristotle is of five kinds and requires five different kinds of sense organs in the body, or soma (σῶμα), which can only perceive in the present, when the thing (or person) perceived physically affects the somatic sense organs. (Throughout De Anima Aristotle focuses on extended, physical things or persons qua extended, physical somatic things.) Things perceived by the senses are therefore outside the soma, not inside it. An inside/outside distinction applicable to extended, physical things, each of which occupies a place (τόπος), is valid here.
But the psyche's faculty of sense perception is not exhausted by the somatic sense organs receiving sense data from outside in the present, since sense perception is always already combined with the mental faculty of understanding what is perceived. The psyche's faculty of mental understanding (νοῦς), employing the power of imagination (φαντασία), allows the psyche to perceive the physical thing presenting itself sensuously also categorially, at the very least as something, the most elementary category, but also qualitatively and quantitatively, e.g a big, red ball qualitatively and quantitatively as something. Otherwise the psyche would not understand what it is seeing, hearing, smelling, tasting or feeling. If, with your sense of touch, you feel something, you at least feel it as, or qua, something, even if you cannot identify it further, say, as a ball. Everything imaginable is interpreted from the ground up as such-and-such. The 'as' here is the hermeneutic as. The ontological category of 'something' is always already understood pre-ontologically and employed ubiquitously by the psyche's mental faculty.
The something seen — say, a chair seen by the sense of sight — is also seen in full (in the mind's φαντάσμα of it) as the extended material, physical thing it is, and not minus its matter. Looking at the chair, you perceive it in full as a physical, extended, material thing and understand it as a chair, i.e. something that is good for sitting down upon. Insofar, your understanding of the chair qua chair is the same (αὐτο) as the thing itself. This observation, however, contradicts Aristotle when he claims that the mental faculty, or mind, only understands what it understands ἄνευ ὕλης ("without matter" III vi 430b33). He splits the thing perceived or understood into its sight (εἶδος) and its matter (ὕλη), not taking into account i) that sense perception and mental understanding work in tandem and ii) that mental understanding (the νόησις of νοῦς) is not tied to being presented sensuously with something in the present. The mind, too, sees through its imaginations (φαντάσματα) and it is able to wander and hop through all three temporal dimensions, calling or allowing all that is to presence in its imaginative mental focus and be understood as such-and-such. Note that an imagination here does not imply a mere image or unreal copy of the thing imagined, but a "mental concept of what is not [necessarily ME] actually present to the senses" (OED). The alleged lesser ontological status of an imagination is a consequence of the mistaken dichotomy between the so-called 'real' outside and the 'imaginary' inside, at the same time attributing a superior ontological status to that which is sensuously present (apparently outside) over what the mind thinks (apparently inside).
Aristotle's assertion that "the stone is not in the psyche" results from confusing the psyche with the soma. The stone is obviously not in the soma, for both are physical, extended, material things to which an inside/outside dichotomy pertains, and each is somewhere in its place. By contrast, the psyche is not a thing, not a being (τὸ ὄν) at all, but the name i) for our openness to the world through sense perception and mental understanding and ii) for our power of self-movement as living beings. This openness is three-dimensionally temporal, to which the psyche essentially belongs. Its extent is therefore as extensive as the three-dimensional temporal openness itself, and hence all-encompassing: we humans cannot experience or understand anything at all which does not presence within three-dimensional time in our mental focus. The material stone presences either sensuously or unsensuously in our mental focus and is understood in full as such, i.e. as a stone with its material.
The psyche has no outside, and therefore also no inside. The confusion arises when the physical-material of the soma is conflated with the sensual perception/mental understanding of the psyche. Then e.g. we seem to have thoughts in our head or our brain, etc., and something called consciousness is said to be inside, even located somewhere within the somatic brain, and we humans are driven to try to make something resembling so-called conscious cognition that is today called Artificial Intelligence.
There is no external connection between the soma and the psyche as two different things; rather, the soma is encompassed by and presences in the three-dimensional temporal psyche insofar as we experience it at all. And the stone is in the psyche.
Further reading: On Human Temporality: Recasting Whoness Da Capo De Gruyter, Berlin 2024.