I just bought a 2003 Tacoma Prerunner with heavy water spotting on the right side. The spots on the paint came off easily when I buffed it with Meguiars fine compound and a polishing bonnet...I then polished at 2200 RPM with Meguiars swirl remover, same type of bonnet...then a hand glaze and then a good wax. Wax is wax, doesn't seem to matter, but I recommend either 3M or Meguiars products for working the finish.
Now, the windows were a challenge. Buffing them didn't work. I wound up using 00 steel wool and chrome polish on them. Worked like a champ, although it WAS a lotta work!!!
There is no easy way around water spots. If they are very bad, you may end up color sanding the finish with 1500 then 2000, and if you want to go to 3000 grit sandpaper, wet, great, I've never had to go any finer than 2000 grit.
I use a rotary buffer, and since I need professional grade equipment, I use a DeWalt buffer, pretty much the standard of the industry. You might be able to get along with a Craftsman or even a Harbor Freight buffer, but my first buffer was a Craftsman, didn't take long before it was giving me trouble. I couldn't tell you how a double action (DA) buffer would work, never used one, but it's probably easier to use. You MUST be careful with a rotary buffer...they are not for the young or inexperienced, but ya gotta start somewhere. They are very aggressive, and will either damage your finish or you if you're not careful. But they will get the job done, guaranteed...