It depends on the condition of the engine. If some of the paint is in good shape, I leave it for a good base, if not, I strip it with paint stripper, brass wheel, whatever it takes.
For restoration, (Not polishing aluminum, or making a show engine) you can leave the flywheel on and bag and tape it. The area behind it doesn't show.
I only use etching primer, not body primer, because it adheres better and provides a harder priming surface- and cures way faster.
For the air-cooled areas, (anything with fins) I use high temp rattle can when it's apart, so I can get in behind the oil breather, carb and exhaust areas. (Tape off gasket surfaces) For the tins, I use single stage automotive paint with a catalyst to make it fuel proof, and sometimes I shoot on some poly clear for finish and shine. Note that I have used automotive paint on the hot areas with no problems, but repairing scratches during reassembly is more difficult than with rattle can.
Once I reassemble the engine and get it running, I rattle can some more high temp on the head bolts, since they do get a bit scratched.
Lots of good advice above and elsewhere on OldMiniBikes, and everyone has their own way of doing it. The biggest thing is to keep it simple and commensurate with the overall restoration or build.