I sand wet wood with cloth backed paper and water. But, I do it with just hand holding the paper.
I did purchase some 3" disc's ….hook and loop....made from the sand paper that looks like a window screen. I do not know the name of it....sorry. But, it stands up to the water. And washes out.
It does a fine job. Run the lathe at a low RPM. Water and wet dust goes everywhere...……….I mean everywhere.
I sand to 150 - 220 grit while the wood is wet. Then dry it slowly over a month or so. Then use a small random orbital sander to sand from 150 - 400 grit with the dry bowl.