Sorry to hear about the OxyClean. Suspect that was from personal experience.
We do not sand between coats but do the following:
When varnishing bare wood, we apply a coat of Smith's Clear Penetrating Epoxy Sealer (CPES) or Wolman's (waterbased) clear Woodlife. The purpose is to seal up the wood and help it stay more dimensionally stable so whatever finish we choose to put on top of it will actually stay as long as possible.
After sealing, we apply 4 coats of varnish without sanding between coats. We try to do two coats per day. Don't apply any in bright/hot sunlight or it will bubble, though. Sometimes we do end up having to do just one coat per day because of heat in the afternoon but prefer two per day if at all possible. We wait 24 hours to 48 hours after the 4th coat to sand. This sanding will smooth out any burbles, get rid of flies, bugs, and drips. Then, after cleaning up the dust and getting everything as clean as possible, we apply at least two but hopefully three more coats. Then, wait the 24 to 48 hours, sand with a scotchbright if there are no runs or drips otherwise sand with paper to get rid of runs, drips, or bugs. Clean and pray for perfect weather to put on the final coat. That should get us 8 coats. After that many coats of spar varnish, one can maintain it with 2 coats every 6 weeks in the bright sunny tropics or 2 to 3 coats every 4 to 6 months at higher latitudes. This method was taught to us by a boatwright who has lovely woodwork on his boat and who does lots of varnishwork for other boats. He states that if we follow this protocol with a decent quality varnish, we will be get the same 8 to 15 years between stripping to bare wood that he obtains for his boat exterior woodwork and his customers' boats exterior woodwork.
If we already have our 8 coats in place, and we're doing our maintenance coats, we sand before the 2 to 3 coats but don't sand between them unless we've manged to have it take more than 24 hours between two coats.