CITATION V FLT CREW EXPERIENCES CONFLICT WITH TRAFFIC NOT ON AN IFR CLEARANCE WHILE IN IMC.

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OUR DSCNT WAS STOPPED AT 11000 FT. WE WERE STILL ON CHICAGO 128.5. WE DID NOT KNOW AT THE TIME WHAT THE HOLDUP WAS ON THE DSCNT. WE WERE CASUALLY KEEPING AN EYE ON TCAS TARGETS AHEAD; PARTICULARLY ONE CLBING OUR DIRECTION. WE FIGURED HE MUST BE OUR HOLDUP BUT WE DID NOT REALIZE HE WAS STILL VFR. AS HE APCHED OUR ALT; THE CTLR TOLD HIM TO STOP AT 10500 FT. ATC TOLD HIM HE COULD GET A CLRNC AS SOON AS TFC WAS CLR; WHICH WAS US. THE GUY STOPPED AT 10500 FT THEN TOLD THE CTLR HE WAS IFR AT THE TIME. OUR PATHS WERE XING AND WE ALTERED OUR HDG TO THE E DURING THE CONVERSATION. THERE WAS A BIT OF COM SO WE DID NOT CONVEY EVERYTHING WE WANTED TO CONVEY BUT WE WERE CONCERNED BECAUSE APPARENTLY THIS OTHER ACFT WAS VFR. OUR TCAS INDICATED CONFLICT. WE TURNED TO THE E; BUT WERE CLR BY THE TIME THE CONVERSATION WAS OVER AND WE TURNED BACK TO THE ARPT WHICH CHICAGO CLRED US LOWER AND OVER TO DEP. AS WE DSNDED THE WX WAS IMC ALL THE WAY TO ABOUT 2000 FT ABOVE THE ARPT. SOME OF THIS WAS LAKE EFFECT BUT STILL AT 10500 FT I HAVE NO DOUBT THE TARGET WAS IMC FOR SOME TIME WHILE TRYING TO GET A CLRNC. PROB IS THE EVENTS WERE NOT AS CLEAR AS HINDSIGHT. AFTER I THOUGHT ABOUT IT BOTHERED ME NOT ONLY DID THE CTLR NOT PICK UP ON THE GUY SEEKING AN IFR BUT IN FACT CLBING IN IMC; BUT WHEN THE GUY IN FACT TOLD HIM HE WAS IFR (MEANING IN IMC) THE CTLR SHOULD HAVE TURNED US AWAY. WE WERE NEVER CLOSER THAN 500 FT IN ALT AND WE NEVER CROSSED PATHS (ONLY BECAUSE WE TURNED) BUT IT WASN'T RIGHT.