Decorative work produces popular song (5)
I believe the answer is:
Here is my best explanation:
'decorative work' is the definition.
(I've seen this before)
'popular song' is the wordplay.
'popular' becomes 'in'.
'song' becomes 'lay' (lay is a kind of song).
'produces' is the link.
(Other definitions for inlay that I've seen before include "Decoration of a surface by inserting wood, stone or metal", "Inserted decoration", "Embedded decoration", "Decorative work", "Type of woodwork", "Decoration inserted", "CD booklet", "Filling shaped to fit a tooth cavity", "Decorate by embedding" and "Embed".)