Gravity Forms - File / Image Upload to Featured Image

functions.php

<?php
form_id = 1;
add_action("gform_post_submission_".$form_id, "add_new_post_featured_image");
function add_new_post_featured_image($entry){
  $title_id = 1;
  $content_id = 2;
  $file_id = 3;
  
	$new_post = array(
		'post_title' => $entry[$title_id],
		'post_content' => $entry[$content_id]
		);
	$new_post_id = wp_insert_post($new_post, TRUE);
	if (!empty($new_post_id)){
    $upload_path = rgar($entry,$file_id);
		if (!empty($upload_path)){
			$attachmentid = jdn_create_image_id($upload_path,$new_post_id);
			$setfeatimg = set_post_thumbnail($new_post_id,$attachmentid);
		}
  }
}

/**
 * Create the image attachment and return the new media upload id.
 * @author Joshua David Nelson, josh@joshuadnelson.com
 * @see http://codex.wordpress.org/Function_Reference/wp_insert_attachment#Example
 * @link https://joshuadnelson.com/programmatically-add-images-to-media-library/
 * @param string $image_url The url to the image you're adding to the Media library.
 * @param int $parent_post_id Optional. Use to attach the media file to a specific post.
 */
function jdn_create_image_id( $image_url, $parent_post_id = null ) {
	// Bail if the image url isn't valid
	if( empty( $image_url ) || ! esc_url( $image_url ) )
		return false;
	// Escape the url, just to be save
	$image_url = esc_url( $image_url );
	// Cache info on the wp uploads dir
	$wp_upload_dir = wp_upload_dir();
	// get the file path
	$path = parse_url( $image_url, PHP_URL_PATH );
	// File base name, e.g. image.jpg
	$file_base_name = basename( $image_url );
	// Full path, set up to work with a WP in a subdirectory or default location
	if( site_url() != home_url() ) {
		$home_path = dirname( dirname( dirname( dirname( dirname( __FILE__ ) ) ) ) );
	} else {
		$home_path = dirname( dirname( dirname( dirname( __FILE__ ) ) ) );
	}
	// Remove the trailing slash on the home path
	$home_path = untrailingslashit( $home_path );
	// Combine the two to get the uploaded file path
	$uploaded_file_path = $home_path . $path;
	// Check the type of file. We'll use this as the 'post_mime_type'.
	$filetype = wp_check_filetype( $file_base_name, null );
	// error check
	if( !empty( $filetype ) && is_array( $filetype ) ) {
		// Create attachment title - basically, pull out the text
		$post_title = preg_replace( '/\.[^.]+$/', '', $file_base_name );
		// Prepare an array of post data for the attachment.
		$attachment = array(
			'guid'           => $wp_upload_dir['url'] . '/' . basename( $uploaded_file_path ), 
			'post_mime_type' => $filetype['type'],
			'post_title'     => esc_attr( $post_title ),
			'post_content'   => '',
			'post_status'    => 'inherit'
		);
		// Set the post parent id if there is one
		if( ! is_null( $parent_post_id ) && absint( $parent_post_id ) )
			$attachment['post_parent'] = absint( $parent_post_id );
		// Insert the attachment.
		$attach_id = wp_insert_attachment( $attachment, $uploaded_file_path );
		//Error check
		if( !is_wp_error( $attach_id ) ) {
			//Generate wp attachment meta data
			if( file_exists( ABSPATH . 'wp-admin/includes/image.php') && file_exists( ABSPATH . 'wp-admin/includes/media.php') ) {
				require_once( ABSPATH . 'wp-admin/includes/image.php' );
				require_once( ABSPATH . 'wp-admin/includes/media.php' );
				$attach_data = wp_generate_attachment_metadata( $attach_id, $uploaded_file_path );
				wp_update_attachment_metadata( $attach_id, $attach_data );
			} // end if file exists check
		} // end if error check
		return $attach_id; 
	} else {
		return false;
	} // end if $filetype
} // end function jdn_create_image_id

?>

Don't you need a $ before the initial form_id?