I'm finishing half of a 22x24 garage as a shop. I have one decision i'm having trouble making and am looking for thoughts about water from an unvented propane space heater.

The subfloor is 3/4" advantech flooring. I was thinking of leaving that and painting with either porch/deck paint or polyurethane. If so, do i need to sand the entire floor first? It seems a little fuzzy. But the other option i'm toying with is putting utility grade hardwood down. I'm not so concerned with the cost, more-so the additional time it will take to put that flooring in and finish. But i figured it would be less maintenance in the long run (moving tools out, cleaning, repainting the floor, etc.), and just a little nicer looking. Any thoughts on one way or the other?

This winter i'll be using a blue flame propane space heater because i got one for free. The walls/floor/cieling are all well insulated and sealed. I'll likely get a cieling mounted vented unit in the future, but for this winter, i'm concerned about my tools excessively rusting. Does anyone have experience with rusty hand tools or power tools from unvented propane heat? If i put a water resistant coating (wax/other product) on the exposed surfaces, is that enough to keep them protected. Or do people find the moisture excessive and need to run a dehumidifier?