A limitation of using file fields on a form is that you cannot pre-populate them. This is a security thing. So instead of pre-populating the file fields you will just have them like normal so that the user can use them to select a file. You need to have the DFP upload server behavior configured like normal to use the file field, but for the default value you should make sure that you are referencing the previous file name from the recordset and the path is going to the folder where this file is. Since the update server behavior works with the DFP value it will use the uploaded file if one is uploaded and if not it will use the default file specified in the server behavior.
To make this more clear to the user you can add the file name binding to the form above the file fields so that the user knows that a value exists already.
As for the insert page any time you access this page and fill in the form you will insert a new record. Once a record has been inserted it can only be updated through the update page. The insert page will never update a record, it only adds new ones.