Well for a start, sanding to 1200 is too fine. You need it a bit rougher so the finish will have something to grip. I think 180-240 is what you'd want.
As for the type of finish is really up to you and depends a bit on your setup, and how long you want to take (drying time, number of coats). If the wood has nice grain then go for a stain and a clear coat. Automotive paints are also often used for guitars.