Funny chance I check in here and see I'm mentioned! Thanks for the thought
I would *not* sand or polish it fully assembled, you could muddy up the inside and mess it up. You'd have to disassemble if it you wanted it powdercoated, bead-blasted, polished/chromed, and painted too. Well, you could paint it as assembled but you'd have overspray on all the internals which can't be good and definitely won't look good.
For cleaning up oxidation and the usual crud that you find on them, the cleanest thing I can think of is either going to be a scouring pad (depends if it'll be abrasive enough) or a nylon brush wheel on a drill. Like this thing:
I do lots of general cleanup with those, they work quickly, nicely, clean up junk and dirt and so on. You can get a nice brushed aluminum look with one of these too. I believe the red ones are 120 grit and the blues are 150 or 180. It doesn't eat up aluminum and sand it down enough to really make a mess, so leaving the alternator assembled shouldn't pose a problem. I've cleaned some up in that manner and they came out very nice. There could be other ways to do it too, but I don't know them.
Good luck
edit: An admin or moderator will move it to tech if they feel it should be there.