Compressor Size

Tanks size matters more than you can imagine. Sure, if you like to get garbage air then use tankless. Bigger tank or additional tank gives much higher quality air. Do not say, you have a tiny water and oil separators, because these are toys. Air dryer and oil separator system is for that purpose. These tiny-tiny things does not separate anything. Bigger 2nd tank is cheap and it helps to cool the air down, much less water can enter to the line(s). Only remember to drain it or install automatic valve

Yes, if you planning use water base paint. Make a thicker paint, it will be thinner just milliseconds after the gun triggering.