Then remove the bulbs by giving each of them a half twist. The sockets will fall right out of the housing. You can then take the housing away from the car.

Step 2 - Your next step should now be to mask off the back of the housing to ensure that nothing gets inside it. Just cover the black part on the back with paper and tape. You never take this masking off until you're ready to reinstall the housing.

Now sand the outside of the housing smooth.

You can use a 400 grit to get off the numbers and lettering along the top. Then use 1000 - 1500 grit to make the whole face smooth. It will look hazy and you'll wonder if you're ruining it. Don't let that scare you as it will all look perfect in the end after you clear coat it.

Step 3 - Now mask off the stuff you don't want painted. This is where I had the most trouble since I cut my mask out of paper and had a hell of a time attaching it. Don't do that. :) When I redid it, I cut the mask out of thin plastic that I got in some computer packaging. (Now I can reuse it on the new car, bonus!).

In retrospect, I think it would be best to cut the mask out of some contact paper or something that will stick itself. Don't use label sticker paper or any other paper that you can stick on. The paint will act like a glue and seep through the paper making it very difficult to later remove the mask. This is a problem I had with mine that kept the edges of my mask from staying sharp. I hate being the guiney pig. Double check the mask you put on the back of the housing to make sure the socket openings are properly covered. You definitely don't want paint getting in there.

Step 4 - Now you spray the whole front with primer. I used regular grey primer since we had a bad experience with "non-metal primer" when doing interior parts. Regular grey primer is wonderful stuff. You'll only need a thin coat. As long as the whole thing is covered, you're fine. You can add a second coat within a half hour if you feel it's necessary.

Now spray your first coat of paint. Let it dry for about 10 - 15 mins and give it another coat.

Step 5 - Be sure to let the paint dry for at least an hour or two and then take off your facing mask. You can now sand down the whole face with 1000 - 1500 grit paper to make it nice and smooth. This includes the unpainted part that was covered with the mask. Don't sand it too hard as you don't want to go through to your primer layer. You can wet sand the part at this point but be careful not to get water on your back covering as it may get through your masking and get inside the housing. You just want the whole thing smooth. Now look at it carefully. Hold it up to the light. If it's not completely covered with paint, reapply the mask (be careful to put it back exactly as it was before) and give it another coat or two.

Step 6 - Once you're done with the colour coat and you've sanded it smooth, you can now start your clear coat. If you sanded it properly earlier (1500 grit over the whole surface) then your red area should still look hazy. Clear coat the whole thing. It will give it a uniform look (no raised edges where the paint starts) and it will make the red part crystal clear again. Leave it for 10 mins or so and give it another coat. Now, if it looks perfect, you're done. If not, wet sand it with 1500 - 2000 and then give it another coat of clear.

Notes
After having done two of these, here's the most important things I can think of:
Use a thick mask so you can easily remove it and get sharp, clean edges. If you use a thin vinyl or something then you may end up losing it under the paint or have a difficult time removing it.

Get a good coat of primer on. You want a thick enough coat that the light won't go through. Mine's painted with black paint because I think it looks best that way but I could have used any colour. The primer blocked the light before I painted it black.

Be careful when positioning your mask! The lit up area is smaller than you might think. If you're just tracing the badges or something then you shouldn't have any problems but if you're going my route and trying to maximize the size of the logo, you'll want to make sure you don't end up outside the usable area.

Here's a pic of my original one from my last car. Besides the fact that it's a bad picture, you can see two vital mistakes. I didn't use enough primer/paint to block all the light so it's dimly showing where it shouldn't be and I positioned the mask a bit too low so the bottom isn't lit properly. You can see where the light bleeds through at the top that I had room to move it up. The lack of light through the bottom of the "P" was much more obvious in person.

Finally, if you mess up, remember that you can simply sand it back off and start over. If you just need a little extra paint around the edges or there's an area that's bleeding light and you've got a careful hand, pick up a bottle of touch up paint and just go to town with it. Don't worry about brush strokes or anything. Just get lots of paint on there. Let it dry thoroughly and then lightly sand it smooth. Repeat this until you've got enough paint on there. When you're done, you clearcoat the whole thing and it will look perfect.

Congratulations, you've now got a wicked looking 3rd brake light. :)