Answer: You should be using soldered copper pipe (from a pneumatic supply house or knowledgeable plumbing supply, NOT a home center or hardware store) as iron pipe will rust internally from condensation. Also, any loose thread sealant will eventually find it's way into your air tools. Some people will argue this, but copper is what new factories and garages are plumbed with. Separators belong at a) the compressor tank outlet b) at every coupler point and c) any low point (which should be avoided). Regulators belong at every coupler point. Teflon tape should not be used with black iron pipe. The threads tend to tear it. As a side note, teflon tape is not to used with natural gas fittings ever!