The problem is that perfect disassembly (figuring out where every instruction starts, and if bytes are instructions or data) of an arbitrary program is undecida

The problem is that perfect disassembly (figuring out where every instruction starts, and if bytes are instructions or data) of an arbitrary program is undecidable. Emulators get around that problem by only disassembling instructions that actually get executed at run-time (and therefore can safely be called "code").