Ty,
I am not sure I fully understand what you are asking. Are you talking about a water filter between your compressor and your sandblaster. Here is what I would do. Use a water trap, sometimes called a separator that is sized for the CFM of the compressor. 1/2" would be more than adequate. This device usually has a plastic bowl and a drain on the bottom. The inlet and outlet are sized in standard pipe. The problem you have is using a small compressor running at 100% duty cycle and no adequate aftercooler to cool the air so the moisture will drop out.
Could you be talking about a dessicant filter? If this is what you are referring to, then you will need a seperator in front of it. A dessicant filter will take out oil and water particles suspended in the air but it is not intended as the primary means of removing large quantities of water. I would dump the dessicant filter in favor of a conventional water trap. It wouldn't be out of the question to run the compressor right to your blaster and skip the trap.
Stuart.