Pretty much you just asked about Sanding, Surface Prep and Finishing . . . that's a big/big topic and not one with hard and fast rules. Everyone develops their own way of doing things to get the results they want, and depending on the products they use.
Two words for you: Test Stick
Everyone uses them at some point, even really really experienced people use them. I highly recommend that you practice your finishing on test sticks. I use 5 gallon paint stirrers which I get free for the asking at Home Depot. I ask for a couple every time I am in there.
In general you want your wood to be as smooth as you want your final finish to be. Depending on the condition you might start with 220 and work up to 400. You don't need to press hard because you don't want to change the shape of the neck. Then typically you wet the wood to raise the grain and then very lightly sand back and fuzz that raises up. Not too much or you will be cutting new grain again. If you have some small nicks they can be steamed out. A search will turn up how to do that (again more than one way to do that). My last step before applying finish is to wipe the neck down with naptha to get rid of any dust or oils. (I wash my hands before handling unfinished wood to avoid oils even though I will wipe it down later).
How you go from here really depends on the finish you are using and how you are applying it. With some products you don't need to sand each coat because each coat melds into the one before it. But if you get runs or other imperfections then you would need to let it dry and sand them out. Depending on where you are spraying, you may need to wipe each coat with say 00 or 000 steel wool to remove any dust nibs. Some finishes like a little 'tooth' to promote adhesion between coats.
To help the real pros give you better answers. Tell us exactly what products you are using and how you plan to apply them or post what instructions you are planning to follow if you are using say a web site or a youtube video.
Have you read through this forum? (the DIY Finishing): http://www.unofficialwarmoth.com/index.php?board=3.0
I mean like really read back through the topics? You can learn alot by taking the time to read back through the topic and following the links that people have posted to other web sites, videos, etc. I did that in quite a few forums as I worked on my 1st two guitars.
