The best way to remove moisture from compressed air is to cool it after it is compressed. This condenses the water out of the hot compressed air as it is cooled. If you cool it while it's in a reasonably large reservoir, the moisture will fall to the bottom, where it can be drained off. You want the outlet from this reservoir to be located somewhere at mid height, so you don't get warm humid air out. A refrigerated dryer located in the output line between the compressor and the tank will work best, so the moisture in the air condenses out of the air at that point, and will fall directly to the bottom of the reservoir/storage tank, where it can be drained off frequently. The second best way is to refrigerate the air as it leaves the storage tank. This refrigeration point will need a reservoir to collect the condensed water and with a drain to remove this water frequently. Cooling the air to about 35-40 deg F works best, as it is above freezing, so no ice will build up and plug the system. After the air has been cooled and the condensed moisture removed, you can let it warm back up to room temperature and it will be very dry and work well in your tooling, blow-off nozzles, and paint spraying equipment. On the output of my air system I have what they call a toilet paper filter. It is designed to hold a roll of toilet paper as the filter medium. It catches the finest of oil droplets and moisture so my tools and paint sprayers never have air supply problems. This filter sells for about $40 at auto paint stores or online.