SC,
Has the aluminum been anodized? If so, you'll need to take it off with Easy-Off oven cleaner, the real stuff, not that environmentally friendly crap. Once you've determined that it's not anodized or you've removed it, you can get to work.
First, you'll need to wet sand the surfaces to remove the water spot damage and scratches, and to smooth the surface. I can't see what you're working with as far as a starting point goes, so I can only guess at what your surfaces look like. Try starting with an 800 grit, using plenty of water to keep the surface and paper wet at all times. If the 800 isn't stout enough to take the damage out, you'll need to drop down to an appropriate grade. If the 800 works for you, sand all the surfaces down to an even, dull finish. Then wet sand with 1000, 1200, 1500 and 2000 to remove the sanding scratches. Once you're satisfied with the surface prep (all of the damage is removed and you're left with a nice, even, dull surface with only the 2000 grit scratches visible, you can start polishing (you can skip the 1500 and 2000, but you'll just have to do more polishing).
You don't have to get too fancy with polishing equipment. If you don't have a die grinder or buffing wheel and the proper buffs, you can try a 4" wool pad on your electric drill. Instead of working your way through several stages of rouges, try a one step polish like Magic Mix. You might even try Mother's Mag and Aluminum Polish. I've had good luck with it. When you're done and satisfied with your results, you can seal the whole project with Zoop Seal, which will keep it from tarnishing for a year.
By the way, there's no such thing as a '69 Z-28 Convertible. The Z-28 was only produced as a coupe.
