There are several good threads on the forum about drying air. Here is the one that I started a couple of months ago.
For $250, I would:
- put in a auto tank drain
- install passive drying with copper tubing
- install some sort of desiccant dryer (preferably a 1qt, but they can get expensive)
- install the Motorguard M-60 filter
You will probably blow that $250 budget with that setup, but it is a starting point. My air drying system has surpassed the amount spent on my compressor, and I’m not done with it.