I would put the welder at the other end close to the garage door. The last thing you want be doing is welding at the back of a wood shop. When I set up my shop I had mine in the back too the first time I went to weld something I spent a hour or two worrying about a fire moved it the next day.
I use Royal Purple Synfilm Recip 100 Reciprocating air compressor oil. Change yearly no more gray sludge when changing oil. It is expensive but so are new compressors.