It really depends on just how bad the paint is. If its all in reasonably good nick, but just needs a shine back on it, I'd consider giving it a buff with some cutting compound first, just to see how it comes up. Better to have a nearly but not quite perfect paintjob than one you have completely messed up due to lack of skill. (Of course as always with spraypainting, if you are committed enough, you will be able to fix any mistakes you make and eventually get it perfect anyway).
If you do this, and then decide its not good enough, MAKE SURE you remove ALL polish or cutting compound from the paint before continuing. This applies even if you dont try to buff it.. after sanding, you MUST very thoroughly clean the car with Prepsol ( Wax and Grease remover ) before you spray anything, and at every intermediate step along the way.
If you are sure it actually needs painting, and you plan on using primer, then 240G is fine. All you want to do is take the shine off it, so the paint sticks properly. Any modern hi fill primer will have no trouble filling any scratches you leave. Just be very thorough, make sure there are no shiny bits left on the paint. I recommend always using primer, although it is possible to spray straight onto the old (properly prepared) paint, primer ensures a good bond and a flat surface.
Once you have primed it, you will find that primer is much softer and faster to sand than cured paint. I hand sand primer with 800G or even higher.
Not sure what you mean with the dents. If you mean what to use to sand down bog, I usually use 120G until its down to near what you want it, then switch to 240G to finish it before priming, and continue as above. I've been known to use 60G on fibreglass reinforced bog, just because it takes too long otherwise, but 60G has no place being anywhere where paint is, so you only use it to take the top off the bog.
I always wet sand by hand, if you plan on using a machine you will want to move to finer grades or you will be sanding through bits that you didnt mean to...