You didn't say what year Mustang, but you can sand the smooth painted surfaces such as the metal dash. I used paint remover on my textured metal door panels, and oven cleaner (the original type stuff with lye) to remove paint from fiberglass and plastic surfaces like fastback quarter trim panels.
Regarding the new coatings, interior metal looks best when painted with a lacquer as the coats are very thin and don't fill up the texture. I use an inexpensive Rustoleum lacquer Camo Tan as a primer, just one coat, and 2 light coats of color. Same with the fiberglass parts. My hard plastics like kick panels, console housing, etc. have been fine without a flex additive. If I was going to paint anything softer, like a door panel, dash pad, etc., I'd use a flex additive.
On metal, I use a wax and grease remover or naptha first, to get rid of any oils, etc., that may be present prior to applying anything. On plastics and fiberglass I recommend using a plastic prep first to clean up any contaminants, then an adhesion promoter to help the paint stick.
SEM has some decent products for both metal and plastic.
On the engine bay and trunk, if the paint is in poor condition it should be removed to bare metal, the metal prepped (cleaned and etched - again I use wax & grease remover and Picklex20 for the etch), epoxy primed, then painted. If there are surface imperfections that you want to finish as if it's an exterior panel, then you can fill, block, high build, etc before painting. A semi-gloss black is the proper color. Eastwood's sells a decent one. Some folks use SPI black epoxy primer as the color coat. Same prep work in the trunk. Depending on the year, the finish on the trunk can be body color, black and white over brown spatter finish and IIRC, 71-73 are also a spatter finish but different from the '67-68 cars but I could be wrong. Do some research on the correct color or paint it how YOU'D like it.
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