[fishing bum wannabe]

Putting the issue of your being out of your mind aside (I don't know you and therefore do not feel qualified to render judgment on that issue), you can do most of what you need to do on a lathe. With the addition of a drill chuck and bit in the head stock you can drill like a drill press. You use the screw feed in the tail stock to feed (push) the wood into the drill bit. With a sanding disk (my favorite is a 6" hook and loop type designed for a hand drill, easy to change grit sizes) and a small drum sander (once again designed to fit a hand drill, available at woodworkers warehouse or sears for less than $20.00) your sanding needs are met. I have a full size lathe but the Midi lathes I have seen plug makers using look perfect for the job, and a better fit for your apartment.

The biggest issue you will face will be dealing with the chips and dust. A shop vac will do it nicely but they are noisy. Then the biggest issue you will face will be the noise. You gonna piss off the neighbors.