FWIW: check your pack's rules regarding wheel sanding. We don't allow any modification of the wheel at all. Axles can be polished, and graphite can be used.
One note on controlling axle direction if you're not using the factory slots: the grain of the wood will change which way the nails go. If you pre-drill, the wood grain will bend the bit and you'll still get a crooked hole. It's not possible to drive a nail straight into wood. (I say this as a cabinet maker when I'm not racing bikes, shooting pictures, or working).
A good solution is to drill a 1/4" hole and fill it with epoxy. Then you drill your axle holes in the epoxy very accurately on a drill press.
...or you can just tap the end of the axle with a screwdriver and mallet until it's going the right direction 
Note that this is all part of the reason that I added the turtle race this year. I want to distract the dads enough so the sons do more of the work. It's amazing how many Tiger cars beat the Webelow cars because the dads build the Tiger cars, and the Webelows kick dad out of the shop. In my experience, the scouts who were the only ones to touch their cars are the ones who are most proud of the result, regardless of race performance.