Hi, I know polyurethane foam is better but is not easy to find and costs a lot for large molds, so I would like to use polystyrene foam or XPS.
When I am done with shaping the plug, what could I use to cover it to sand flat and smooth until a polished state?

The Styroshield is great compared to nothing - it actually lets you use polyester resin on EPS - but it isn't perfect.  You have to be careful to get complete coverage and it sometimes still leaves holes where there were small bubbles or gaps.  I have used it mostly so EPS can be covered in a few plies of chopped strand mat and then a polyester tooling paste that is machined to the final shape. 

For preserving the initial shape with a reasonably consistent offset, I agree with Hanaldo that a layer or two (or more) of 200g e-glass in epoxy is probably a decent substrate - but it will be like fairing a surfboard - very easy to burn through, dent or crush.  You may find it's easiest to smear the foam with thickened (with Q-cell or phenolic balloons) epoxy and then place dry fabric over and wet through using a brush (or paint roller) and wetout roller to smooth out.  

Be careful to fully cure the epoxy (maybe with some heat) and remove blush and sand (or better yet use peel ply on the glass layer).  If the epoxy is not completely cured the polyester primer (Pattern Coat Primer) will not fully cure - it'll stay gummy and you'll have to acetone it off.  Same goes with Duratec primers which are similar.