You shouldn't sand the block at all unless there is existing damage of some kind - but it really doesn't take much to damage, even a fine scratch can ruin the seal for the gasket. If you have to sand it, you will have to finish it to quite a fine grade and be very careful about keeping the surface relatively even/level.
If you are very careful, you can use a razor blade to scrape the old residue off the block - just remember that if you scratch it at all, you'll have to repair the damage (by sanding and resurfacing the affected area of the block). Many people use plastic tools (any kind of hard-edged plastic scraper) to avoid the possibility of scratching the surface.
Chemical gasket remover compounds are also available, which smell like death, eat disposable gloves, and burn your skin, but will chemically eat away any gasket residue. I don't have any personal experience with them, but for $10 or so for a tube it may be worth a try. If you don't need something as heavy-duty as gasket remover, you can try a solvent like varsol/paint thinner to help loosen the remnants.