Help please! What are my options?

I was high bidder at a sheriff auction a few weeks ago. I paid my deposit immediately to the clerk of court. While preparing for closing, the title company finds out that the seller who was being foreclosed upon, sold the house the day before the auction. But get this, the deed was not recorded until the day after the sheriff sale. My deposit for the sheriff sale was recorded before the other buyers deed was recorded. (This sounds like something you learn about in RE class). My title company will not insure title. 

Who has rights to the property? Do I have any rights to the property and should I pursue it?

Info that MAY be helpful: There were 3 liens on title, 1st position mortgage was foreclosing. I was told by title company that my bid at auction would clear all liens. Based on the other buyers sale price, i don't think their sale amount would pay off all liens and fees.  The mortgagee did not cancel the auction, therefore assuming they were not aware of the seller selling. Is the other buyers purchase even valid?

Any other info that may be helpful to know in this situation? I have not officially talked with a R.E. attorney, I know some of you would suggest that.

This is a lower priced property (50K) and it's my first deal! Yahooooo!

Thank you for any suggestions, advice or opinions.