Do I Sand Color Coat Before Applying Clear Coat?

no....... you not supposed to sand it but you should sand and buff clear coat

1. What is a good class series for Mercedes-Benz that is still afordable?

Do not listen to the guy that says they are all junk. Most of the older pre 1995 Mercedes are very easy to work on if you get a straight engine rear wheel drive one. I have had a 1993 190e and I currently have a 1990 300e. Both are really cheap to maintain and work on. Most problems can be fixed by replacing the over voltage protection relay, fuses, o2 sensors or other relays. The engines in both cars are really reliable. You can find a slightly beat up 190e for less than $1000 and I got my current 300e for $500. All it needs is a bumper ($150 online) am ovp relay ($55 online) clear coat on the hood, a blower motor strip fuse ($2) and spark plugs. That's it. Cost less than $500 to fix and it will be mint and drive down the road another 23 years.

2. Prepping/Sand/Prime Car and Bumpers for paint?

alrighty here we go... first off i dont know if you trying top paint a show car or just touch it up etc. so ill assume your looking to make it nice but not necessarily show ready... first take off all the bumpers, doors, hood, spoiler, etc. now start with 400g sand paper ( i prefer, and would recommend using a dual action sander ( DA ) and run it over the car until all the clear and even some of the base coat is off. you should be able to see the clear gloss remaining by using some light ( you will see what i mean) now re sand the car with 600g. now do this for everything off the car bumpers hood etc. alright now everything is sanded. time to prime... first any spots where you have gone through the paint and hit metal NEED TO BE ETCH PRIMERED!!! just buy a rattle can ( spray can) of etching primer to do this. now with the primer you've received from summit you probably overpaid but it should work fine. some people swear buy only spraying at 45psi i say spray whever you feel comfortable, it all depends on how fast you move and how much paint you want to come out. do at least 2 coats of primer pretty thick over everything... now more sanding ( i personally hate sanding but it all part of the process) this time were going to wet sand. because of your exp. level i would reccomemned using 600g to start wet sanding and maybe use 1200g after. i use a diamond pad but u can do this with a foam pad or even by hand if you prefer. sand all the bumps and grit out of the primer ( it will take a long time and you probably will be sore by the time its done lol) now wipe everything off with a cleaner/alcohol base degreaser, then run a tack cloth over everything. time for base coat! same general idea as before stay about 6-8" from the surface, good even coats try not to run the paint very much etc. let the base sit and depending on temperature will dpeend on how long lets say its 60 degrees farenheight give the base a few ours to set up before spraying the clear coat. for clear coat spray it just like base. now more wet sanding!!!! get all the orange peel, and dirt wet sanded out and then its time to cut and buff it...( this wetsanding should be with 1200 only) i use meguiars diamond cutter coumpound but you can use whatever i would reccommend something that is aggressive just because ths is ur first paint job it will help take out the imperfections anyway i use 3 coumpounds starting with aggressive finishing with a machine glaze . congrats put it all back together carevfully and you should have a decent looking 92 camaro rs flex additives... well they say u should use flex additive on plastic ( flexible) bumpers, etc. personally i never do i know guys that do all the time but ive never had a problem ot using it honestly so your call.

3. can you use polishing compound on a clear coat finish??

You can use polishing compound but avoid rubbing compound