As mentioned in this question there is a pretty good analysis of the movie here. Here is a snippet about the hitman:
The hit man thing is confusing. Who is the long-haired guy he murders? And what about the prostitute he ushers into the van? Is that Diane, too?
The guy he shot so perfunctorily made some remark about a car accident. The implication seems to be that he was in one of the joyriding cars that hit the limo, and that he ended up with some sort of black book that the guys who were about to kill Rita possessed. In the logic of Diane’s dream, the hit man needed that as a lead to where she was. We know that it’s not going to help him find Rita, but he doesn’t know that.
As for him later on at the diner, remember that at that point Diane is awake. Earlier when the hit man shoots the janitor (and everything else) that is during a dream. There may or may not be a real significance or relevance (this is a David Lynch film after all), but a lot of the movie seems to show the contrast between Diane's dream (what she wants to happen) and her reality.
It has been a while since I have seen the movie, so if I am mistaken about the timeline or anything feel free to correct me!