Quarantine tanks don't have to be big or fancy and a 20-40litre tank is usually fine. However, if you go bigger there is more water for the fish and it's easier to keep ammonia levels under control. Ammonia can be an issue in quarantine tanks due to some medications killing filter bacteria and then fish food and waste produces ammonia that won't be broken down because the filter bacteria are dead. If you have a bigger quarantine tank, there will be more water in it and any ammonia produced will be diluted more compared to a smaller tank with less water.
You can use a plastic or glass aquarium or even a plastic storage container. The advantage of a clear glass or plastic aquarium is you can see and photograph the fish, which makes identifying the problem easier. Whatever tank you get, make sure it has a good cover to stop the fish jumping out.
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If you put another filter into the main tank, you can use that as a filter for the quarantine tank when you need to set it up. If you have an external canister filter, you can put a round sponge filter in the intake of the canister filter, and the sponge will develop a colony of filter bacteria. This sponge can then be put on or in an internal power filter and used in the quarantine tank. Alternatively you can have an air operated sponge filter in the main tank in addition to the normal filter, and the air operated filter can be moved into the quarantine tank when needed.
To set up a quarantine tank you simply fill it with water from the main tank and put a filter and some plastic plants in. Then add the sick fish. If you get new fish, they can go into the quarantine tank for a month to make sure they are disease free, before they get added to the main tank.
If you want gravel or sand on the bottom of the tank, just put a thin layer 10mm (1/2 inch) and no more. The fewer items in the tank, the better medications work. This is due to the disease organisms having more areas to hide in and the medication does not always get into every nook and cranny straight away. So the less stuff the better. A few plastic plants or cave is fine and these can be bleached after use to clean them. Have a filter heater and cover and that's about it.
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When the quarantine tank is not being used, you wash it out with freshwater and allow it to dry. If a fish died in the quarantine tank, you can add a heap of salt to the tank and leave it to run for a day before draining it and washing it out. Or you can drain the tank and wash it with bleach, leave the bleach for 5 minutes and then wash the bleach out. Rinse the tank well and then allow it to dry.
Most fish diseases die when they dry out so normally you can just rinse and dry and leave for a few days and it will be free of diseases.
Store the tank somewhere safe and where it will not get contaminated by anything. I put a piece of plastic over the quarantine tank a few days after it has dried. This keeps the dust and dirt out.
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Most fish health issues are directly related to poor water quality. So good filtration, regular water changes and gravel cleaning, and don't overcrowd the main tank, and you should never see disease outbreaks.
As mentioned above, all new fish should be quarantined for a month before being added to the display tank. Fish diseases are readily transmitted via contaminated water, snails, ornaments, plants and sick fish. Putting all new plants, snails, shrimp and fish into quarantine for a month will let you identify and treat any issues on the new fish and prevent those diseases from getting into the display tank and killing your current healthy fish. You can also treat all new fish for intestinal worms (tapeworm and threadworms) while the fish are in quarantine. This will prevent worms getting into the display tank.
