Water will accumulate in the lines and gun.....At the moment of your best work,a giant "booger" of water will spit out of the end of your gun,really pissing you off..... The trap from Lowes should work OK.....Secondary line pressure is a GOOD thing if you don't have that already.
In a perfect world,you should have 2 ways to control pressure....1 for tank pressure(tank cutoff) and the second for line pressure,as close to your tool as possable....You don't want to use the tank cutoff as line pressure ,then your line pressure will go up and down as you use your tools or spray guns in this case.
You set your tank pressure at say 80lbs for a single stage pump,like yours....Then set your secondary pressure/water trap at say 30lbs (or whatever working pressure you run at) then your line pressure will stay constant no matter what the compressor is doing.....
Get your secondary water/pressure setup as far from the compressor as you can,that will help condense the water out of the air,letting the trap do it's job better.Remember to drain your compressor tank.....Could be lots of water inside,depending on weather and how much it gets used.Compressors compress air,not water,so some water drops out and sits in the bottom of the tank,the rest stays mixed with the air and tries to make it out of your tool or gun.
You want something like James said,water trap/pressure setup....Lowes if they have one or Harbour Fright (yes,I know how it's spelled.... ) will be fine for your setup.Don't worry about oil yet....when you start seeing "fish eyes" in the paint,it's time to start worrying....