The condition "if sum of (xi-x_bar)^2(yj-y_bar)^2=0 when i=/=j" indicates that for the sum to equal zero, each term must also be zero, implying that all data points must lie on a straight line. This results in a perfect linear correlation, as the squared terms being positive definite means that any deviation from the mean would contribute positively to the sum. Thus, the only way for the entire sum to be zero is if there is no deviation, confirming linearity. Understanding this condition is crucial for interpreting scatter plot correlation coefficients accurately. The discussion emphasizes the mathematical foundation behind linear relationships in data analysis.