There's been a lot of this lately. Sounds like you're oversanding. At least you're not using 50 grit. You don't need to remove any clearcoat except for where peeling exists. Once any defects such as rust, dents, chips, deep scratches are smoothed out, you're only looking to roughen the surface with 320-400 grit to give the new paint something to adhere to.

I think it's OK to dry sand for prep work. I did so with 320 grit. It saved a lot of effort and any scratches were easily filled by my first coat of paint.