Inter is indeed in better condition and the last 5 weeks in Serie A show them in a positive trend compared to Milan but remember this is a semi final match and we also have to consider the rivalry of the two teams besides that if we still remember Inter defeat in the Italian Super Cup final we have to consider that Milan could do it again.
Let's see the opportunities given by the bookies.

The chances are quite high for both teams and even for BTTS the bookies give odds @1.80, I doubt whether both teams will be able to score.
This match has very high tension in Italy they are the Milan Derby meeting so it is very difficult to determine who will come out as the winner even though if seen from the side of both teams Inter as a whole is better and compared to Milan Inter is sharper, Milan still has not found their game Milan is still guessing especially the closeness of the players to each other is not yet trusted they have not been able to fill each other that's what makes me a little sure Inter can win this match.
With the way AC Milan performed in the Italian Super cup against Inter Milan, similar thing might happen in the Coppa Italia semifinal match between both teams tonight. Inter Milan is at the top of the Serie A table and can win the Scudetto if they are consistent while AC Milan is wandering in withing the 9th position and there hopes of qualifying for European Competitions next season is very minor which means this is another opportunity for them to win another trophy therefore they will take this game more personal than Inter Milan. AC Milan has lost form but they have scored goals in their last seven games in all competitions which means they still have potential strikers who scores for them so they can win if they can probably score against Inter Milan tonight.
For BTTS I think this is very doubtful especially seeing Inter's defense which is so solid it is very difficult for Milan's attackers to penetrate it and in this match I think the result 0-0 will end seeing both teams with the drama they always show I see a draw will occur in this Coppa Italia match.
Both teams concede goals a lot in their games, so BTTS is very possible and looks like a better option to include in a bet. Their both defense is nothing to write home about, the only thing that is saving Inter Milan is their strikers because even when they concede, their strikers will be there to retaliate and score back. In Inter Milan's last six matches, they only got 2 clean sheets and conceded goals in 4 matches so i wonder how solid their defense is as you have said.