That is the same system I used. It is a wet system. I used a spray bottle with water and a small amount of dish washing liquid in it.
Also, be sure to flush out the sanding pad after every pass. And I do mean EVERY pass. I would run the vertical-horizontal pattern on the end of my tank, take the pad off and take it to the sink and rinse it out completely. Then, wipe the tank off with a clean towel and make another pass. Repeat until you are happy with that pad, then go to the next finer pad and repeat again.
I goes pretty fast when you get into the groove. I would HATE to do this all by hand, but the RO sander REALLY speeds it up. And the results are fantastic!
One other thing, this is one area where it is a bigger mistake to be too conservative on picking the starting grit. You will HATE life if you decide to "be careful" and start with a high grit pad (aka: finer pad) and then sand and sand and SAND and STILL not get those scratches out. If you start with a pad that is a bit too course for the size of the scratches you have, the very first pass will probably take all the scratches out, and then you can move to next finer grit and start working your way up.
There used to be some pretty good articles on how to polish up acrylic online, so you might want to do a bit of reading before you start work.