Here's the end result. I applied clear nail polish and it got all clumpy and dried fast. After that, I tried to wet sand it with 150 grit. Did the best that I can do without damaging any coating on the bike already. Didn't want to keep sanding away and past through the clear coat. So if you shine light above, you can see slight bumps from the clear nail polish. Otherwise, it looks perfect head on or if sun hits it. I'm happy with the results. The chipped paint didn't get fixed, but the edging is a bit smoother. My problem is... either I have OCD or I just need to accept the fact it's a MTB and it's meant to get dinged up.
Product used was Meguiar's Ultimate Compound. After using it, I wiped it clean and applied 3 layers of wax.
I don't mean to feed the flame of your apparent OCD, but 150 grit is not even close to a fine grit paper.
Next time to get that showroom finish after the clear nail polish is applied, you can
start with 220, wet sanding it very lightly, then move to 320 wet, then 400 wet, then 600 wet, then #0 steel wool, #00 steel wool, #000 steel wool and finally #0000 steel wool. After that it is ready for a rubbing compound or two or three. Be sure not to use one that will react with the remaining layer of clear. Then get some paste wax and work it in for a few hours.
After it dries and hazes up evenly. Go to your local home center and get a 7" grinder with a buffing wheel on it. Go to town with this,
but keep a close eye on the finish because very soon your repaired/restored chainstay will be asymmetrically better looking than the other. If this does indeed happen, repeat steps 3-23 on the other side. But don't make both stays more awesome than the remaining sections of the frame because aside from the inconsistent level of beauty, it will also be a lot harder to manual due to the now, relatively heavier front triangle of the bike.
If and when you finally get it perfect, then the thing to do is strip the frame down, mount it on Mahogany plaque, and assuming it does not clash with your sofa covers, hang it above your fireplace or perhaps in the drawing room or even in the dining room next to your fine china.
Wherever you decide to hang it is up to you and your family, but don't dare ever ride it again, because this caretaking of the material plane takes over your entire life. And we sure don't want that, do we?