One thing you might do to free up space if you have the side yard room to do it, is to build a "lean to" or shanty off the side of the garage. Many ways to do this, but basically it's just a concrete slab and then boxed in up to the overhang, or can put a slanted roof on it. This space only need to be 8" or so around the compressor, and the compressor will sit in it and plumb the air thru the wall. Insulate it, and put a fan in there will keep the noise down from the outside. This frees up floor space in the garage, and keeps the noise down, and keeps the dust from getting to the compressor. Perhaps the biggest benefit though, is that should the tank fail (not often, but they do on rare times) it will have a better chance of not taking out your garage.
Offering up my ideas based on what I've changed, and what I wish I'd done. Compressor is still in back corner of my garage, but I've been sketching out how I can change that. My compressor is older, but I've had it since new and serviced it regularly along with keeping the tank dry. When I replace it, I'll be looking at moving it outside the garage at that point.
