How to sand it?
Here is my method and advise.
If you are dry sanding by hand, or machine ( air powered DA sander) , 600-800 grit is probably a good grit. A grey scuff pad is good to get into cracks , saucer holes, and shooter lane, just to dull it. Just dull the pf really well. No shiny spots. Any finer and adhesion could be an issue. Any courser you might break through.
When I do restorations I clear initially with 2-3 coats, sand with 800 by machine to remove most dimples/insert leveling ,careful not to break through, reclear with 2 more coats, and flat sand to level it completely . Low spots will still be glossy, so you can tell when to stop sanding once all dull. Only if I get scared that I might break through, cause its real bad around the inserts, I clear it again with 2 more coats and sand again. Then start my art work touch ups. After I finish all of the art touch up, I clear it again with 2-3 coats and let it dry for a few days.
Then if it has dirt inclusion , ( trashy spraying environment) sand it with 1500,then 2000, then 3000, then polish with a buffer. Usually buffing 3000 grit is possible with just a polish , NOT A GRITTY RUBBING COMPOUND . Polish until its full gloss, as wax will not shine it up, keep polishing until it looks tits. (If you know you are going to have to sand and buff then 3 coats are a must )
If you don't have a trashy paint environment, and a super clean booth is available , I might just sand the last clearcoat lightly with 800 grit , just to dull it and reclear it with one or two coats for a final time.
Let it dry for a week before you populate it, so parts don't stick to it for a future teardown and to let it cure real good .
Wait a month to wax it , unless you use straight carnuba wax, and a week will be fine.
Good Luck, it's very rewarding to do one this way, I've done over a dozen System 11 era games and they all look better than new when done.
JP