Ross,

There should be a small drain valve located on the bottom of the tank. If there isn't a valve, there should be a small plug...maybe 1/4" and you can install your own valve.

Be sure to drain the compressor storage tank of air before you do any work on it.

Installing the drain valve probably will have no bearing on the water coming out of your air tools. That 'water' is moisture that has dropped out of the warm air as it cools and travels through the plumbing towards your impact wrench or DA sander.

You might buy a water trap and install it ahead of your air hose. These can be purchased reasonably at somewhere like Harbor Freight...they are called 'filters' and should be sized for 1/2" pipe..3/8" minimum.

The whole secret is to find some way to cool the air and then separate the water before it gets to your air hose. Good luck.

Stuart