It is possible to settle in Covenant if the player completes the Human Error side quest.
Inside Covenant, players can find a few things that raise suspicions, like an abandoned bed roll, a note that talks about the rules of Covenant and how not to talk about Synths, and self-help books. Yet, none of this leads to concrete evidence of the fate of the caravan's survivors, or Covenant's involvement.
If you destroy the institute, the covenant quest chain no longer starts. You need to acquire the settlement earlier in the game.
If the original inhabitants of Covenant have been killed, any remaining turrets in Covenant will be hostile towards new turrets, the player character and hostiles.
Visitors to Covenant are subjected to a psychological test, called the SAFE test.
The Institute may do wrong, but they have the resources to literally rebuild what was lost in much less time than any other existing faction. If you destroy that, you could set back humanity's progress by a huge amount, if not destroy it's chances of ever recovering from the Great War.
If you decided to side with him, in order to use Covenant as a settlement, you have to take it over. everyone except for Deezer, the lemonade serving Mr. Handy, and the cat that wanders around the area, and the workshop will be usable.
For those who want to play the good guy, the Minutemen, Railroad, and Brotherhood of Steel all provide good endings. Two of the three factions are anti-Synth though, so if one wants to help the Synths at the same time, the Railroad is the only option. The Institute ending would be considered the "evil" ending.
It is possible for Covenant to be a randomly selected settlement for the Feeding the Troops mission if Human Error has already been completed and become an allied settlement. Taking the crops by any means will result in a loss of allied settlement status. This includes access to the workshop and all allied perks.
If you are not worried about role-playing just let Amelia die. There are no repercussions for doing this and it keeps the settlement friendly.