First I used 40 grid to sand my windows frames. Then used a primer specifically for window frames. Then sanded lightly with 120 grid and painted over it with paint specifically for window frames. The exact name of the paint is acryl colored enamel. It also specifies that it is suitable for wood, metal or rigid PVC. The brushes are also specifically for these type of paints.
However now I see light streaks. How to proceed?
It looks like what you are seeing is the grain in the wood. There are a few things to think about here:
40 grit is pretty aggressive for sanding a window frame. It will raise plenty of grain in the wood forming plenty of tiny channels. If you want a very smooth surface, you will need to fill the groves or sand more...or don't use such a heavy grit to start.
Priming is good. It starts the process to seal the wood and gives the paint something to bond to. It also hardens all the tiny fibers of the wood and allows them to be cut off with a sanding to make the surface smoother. You used 120, but probably did so too lightly. ( because the 40 grit was too heavy) Tiny valleys remained. Sanding more with 120 grit to smooth out and then priming again can help.
Even with primer you should apply at least 2 coats of paint, preferably 3 when painting raw or heavily sanded wood. Allow the paint to dry properly between coats. Not doing so will cause brush marks that cannot be removed without more sanding. If you want a super smooth final finish, sand the 2nd coat, after it's dry, lightly with 400 grit. Then paint 2 more coats with the paint slightly thinned. this will allow it to flow easier and fill the micro valleys to give an extra smooth look.
Remember the 3 foot rule. Observe your work, ( Or any finished work) from a distance of at least 3 feet away. Look at the project as any normal person walking by may look at it. Examining it like Sherlock Holmes with a magnifying glass will definitely show imperfections...and consequently drive you crazy if you are expecting none.
You have 40 grit scratches showing.
If you sand with 40 grit, you'll need to sand with 60, 80 and 100 before you move to 120 grit, or you end up with scratches the 120 can't sand out in any reasonable period of time left by the 40 grit. Observe the scratches from the previous grit as you are sanding, and only move to a finer grit when all the scratches from the coarser grit are removed. Using a harsh raking light makes it easier to see the scraches.
Too late now, but 40 grit is far more coarse than almost any windowframe should need.
It doesn't look like you got a response on this:
How to proceed?
Let the paint get really dry. Sand smooth. Repaint. You don't need to remove all the paint, just get to a smooth surface. Painting over bumps and ridges will tend to make them more prominent.
And while the sanding thing people are mentioning could be a factor, it looks to me like you overworked the paint. You really don't want to come back over the paint once it starts to get tacky. Wait till it is dry to add another coat. You will get better results with many thin coats than with one or 2 slathered on goopy coats.
