Front End post form either sets a thumbnail or give me ID, I need both

I have a WP front end post form that I have made for my website, the Idea was to make it so artists can post up their own mixtape submissions!

So far I have managed to get the form to either use the image uploaded as the featured image OR give me the images ID so I can put it in the post content, the problem is I need both! I need the image automatically set as the thumbnail for the post and I need the ID so I can set the form to automatically put the image where I want it in the post!

So far I have located the problem to be this bit of code:

     if ($_FILES) {
foreach ($_FILES as $file => $array) {
$newupload = insert_attachment($file,$pid);
// $newupload returns the attachment id
}
}

I say this as, the location of this code is what changes whether I successfully get the ID of the attachment or whether the image is set as the thumbnail.

The whole code is as follows:

    function insert_attachment($file_handler,$post_id,$setthumb='false') {
// check to make sure its a successful upload
if ($_FILES[$file_handler]['error'] !== UPLOAD_ERR_OK) __return_false();

require_once(ABSPATH . "wp-admin" . '/includes/image.php');
require_once(ABSPATH . "wp-admin" . '/includes/file.php');
require_once(ABSPATH . "wp-admin" . '/includes/media.php');

$attach_id = media_handle_upload( $file_handler, $post_id );

if ($setthumb) update_post_meta($post_id,'_thumbnail_id',$attach_id);
return $attach_id;
    }

    function mixtape_fep($content = null) {

global $post;

// We're outputing a lot of html and the easiest way 
// to do it is with output buffering from php.
ob_start(); ?> <?php

    if( 'POST' == $_SERVER['REQUEST_METHOD'] && !empty( $_POST['action'] ) &&      $_POST['action'] == "new_post") {

    // Do some minor form validation to make sure there is content
if (isset ($_POST['title'])) {
    $title =  $_POST['title'];
} else {
    echo 'Please enter the wine name';
}
if (isset ($_POST['description'])) {
    $description = $_POST['description'];
} else {
    echo 'Please enter some notes';
}       
    $cover_id = get_post_meta($post->ID, 'thumb', true);

    $cover = wp_get_attachment_link($cover_id);

    $content = $cover.'<br /><br />'.$description;

    $tags = $_POST['post_tags'];

// ADD THE FORM INPUT TO $new_post ARRAY
$new_post = array(
'post_title'    =>  $title,
'post_content'  =>  $content,
'post_category' =>  array($_POST['cat']),  // Usable for custom taxonomies too
'tags_input'    =>  array($tags),
'post_status'   =>  'publish',  // Choose: publish, preview, future, draft, etc.
'post_type' =>  'post'  //'post',page' or use a custom post type if you want to
);

//SAVE THE POST
$pid = wp_insert_post($new_post);

    if ($_FILES) {
foreach ($_FILES as $file => $array) {
$newupload = insert_attachment($file,$pid);
// $newupload returns the attachment id of the file that
// was just uploaded. Do whatever you want with that now.
}
    }

         //SET OUR TAGS UP PROPERLY
wp_set_post_tags($pid, $_POST['post_tags']);

//REDIRECT TO THE NEW POST ON SAVE
$link = get_permalink( $pid );
wp_redirect( $link );

    } // END THE IF STATEMENT THAT STARTED THE WHOLE FORM

    //POST THE POST YO
    do_action('wp_insert_post', 'wp_insert_post'); ?>