Water in the line is OK for an air gun, but you don't want any water in line when painting. View attachment 1715565847 There are in-line separators available. Also can use this little trick-see photo.
I use the up and down method but I added valves at the bottom so I can crack open the valve every now and then to let the water out.
I have 5 runs that go 15 feet high then go to a spare tank and I added an extra run up the wall before I connected to the shops air piping.
I have no faith in having to add dryer material or changing filters. I went from pressurized water to very dry air. When I paint I have a dryer on the pressure regulator.