I always use automotive spray paint. Duplicolor brand is what's available at my nearest auto parts store and it does a fine job for rattle can paint. Of course it isn't as good as using a professional spray gun, but it's also a LOT cheaper.
Like everyone else said, wet sand between coats. I usually sand after the primer and then prime and sand again. Normally that will fill all of the scratches, sanding marks etc. but if need be you can sand the finish coats too. It's not always necessary but sometimes it is. Start with 400 grit, then go to 600, and then 800. clear coat and then some turtle wax when you're done for extra protection and shine.
2Door, thanks for that info, I didn't know that the duplicolor clear coat wasn't gas resistant. I'm planning on making a fiberglass gas tank soon, over the winter maybe. Guess I'll have to find some other clear coat.