Integrated sensing and communication (ISAC) has been considered a key feature of next-generation wireless networks. This paper investigates the joint design of the radar receive filter and dual-functional transmit waveform for the multiple-input multiple-output (MIMO) ISAC system. While optimizing the mean square error (MSE) of the radar receive spatial response and maximizing the achievable rate at the communication receiver, besides the constraints of full-power radar receiving filter and unimodular transmit sequence, we control the maximum range sidelobe level, which is often overlooked in existing ISAC waveform design literature, for better radar imaging performance. To solve the formulated optimization problem with convex and nonconvex constraints, we propose an inexact augmented Lagrangian method (ALM) algorithm. For each subproblem in the proposed inexact ALM algorithm, we custom-design a block successive upper-bound minimization (BSUM) scheme with closed-form solutions for all blocks of variable to enhance the computational efficiency. Convergence analysis shows that the proposed algorithm is guaranteed to provide a stationary and feasible solution. Extensive simulations are performed to investigate the impact of different system parameters on communication and radar imaging performance. Comparison with the existing works shows the superiority of the proposed algorithm.