what is the function of the chorus? does it serve as charater involved in the conflict, or merly as an observe who is detached from the events

The chorus is present to help the audience understand the unfolding of events.  Remember, this was a time before any sort of sound systems; therefore, aside from choral intrusions, much of the play was understood by audiences as mime.

However, this is not the only purpose of the chorus in Oedipus Rex.  They also serve as critics to the action, dissenting or approving of the action on the stage.  They are not detached...rather, they have a vested stake in steering the eventual outcome of the tragedy, helping Oedipus interpret his actions and steering him as needed.