What is the best way to clea and protect the inside of the engine compartment?

 

Spray it with WD40. Will prevent rust and loosen up any dirt clinging in there. make sure you do this when the engine is cold.
What I usualy do is spray wd40 than come back 30 min later and spray the engine with a hose at full presure. That will knock off the grease type dirt. Than after it dries off do a light spray coating of the wd40 again. Most used car dealers spray wd40 in the engine bays to make em look new and in good condition.

 

i'd keep my full pressure stream of water away from electrical components though

 

What about powder coating?