You may want to add a few steps of sandpaper grades in between, say 80, 120, 180, 220. Test for lead on those painted areas. Use a box fan and blow the air out of a window, this will help control dust. A furnace filter on the fan helps keep the dust from spreading everywhere outside.
If you want to seal the cracks, use epoxy. To simply fill them to create a smooth surface, use the wood putty. You'll have to apply the filler after the first sanding, and perhaps touch it up before the final sanding.
Water-based polyurethane is easy to work with and looks great. And you can tint it.