Theres tons of threads here about this if you do a search. Some are even step by step instructions. In a quick flashthru. Use 320-400 sandpaper dry to prep it. Anything finer wont give paint a good grip with new paints. You dont need to take off all the old paint, just sand it all off where it might be peeling and the rest just enough to take off all the gloss. Its perfectly fine to paint over old paint in fair condition. I use red oxide (only for me) laquer base primer myself. Paint dont like to stick to gray (another long story) in my experiences. Most will swear by catalyzed 2 part primer although the few times Ive dealt with it, it was a disaster. They make small kits of fiberglass that have the matt, resin and hardener along with a mixing cup for pretty cheap. I prefer dry sanding because you can see what your doing, not so when you wet sand. The only benefit of wet sanding for prep is that you use less sandpaper...which is dirt cheap.
There are a lot of preferences others use that will differ, but really your choice. The only paint exposed to the weather is the clear. So get good clear, and you can use cheaper grade basecoat colors as long as theyre compatible. Ask your auto paint salesmen about that...brands vary a lot. I use R&M/BASF Diamont color and Limco clear, same as some of the top paint shops in the country that do $100,000 cars and not very expensive. PPG and Dupont for example are vastly overpriced and not any better.
Owner / Operator Custom Paint and Body...
specializing in Corvette & Higher End Autos for 40+ years
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[This message has been edited by rogergarrison (edited 05-31-2008).]