The compressor shouldn't have any issues filling a larger tank. Just means you'll have more volume to work with. However the compressor will need more time to fill it. Putting a water trap between the two probably is asking for more headaches. Just be sure your tank has a drain and use it frequently.
Probably the easiest way to limit the amount of water vapor being ingested into the tank is to limit what is going into the compressor. Refrigerated air dryer. Or the poor mans way is to position the compressor where the air is coolest and least humid. Warm moist air rises, cold dry air settles. Place the compressor close to the floor but not actually on it. About a foot off the floor is best. A bare concrete floor will hold moisture even if the air is 'dry'. Also, make sure your tank drain is the lowest part of your system.
Also I do a little extra step to keep water condensation levels low in my system. I will backflush the tank with alcohol. A cup of alcohol poured into the tank, swirled around then drained out will pick up much of the water and debris. Once you get as much as you can out the drain. Start the compressor and let the air flow through the tank and out into the atomosphere. DO THIS OUTSIDE if possible AND NO SMOKING or IGNITION SOURCES within several feet of the unit. Alcohol vapors can make one hell of an explosion. After a minute or so you can button it back up and start painting again.