Dominick, I just finished getting reservations set for Spain in August, so I think I can help a bit. Start with
www.frommers.com They have good reliable info--I've used them in other places (Paris, Brussels) and was always very pleased. I used them to book a place in Barcelona for $27 US a night for this August.
Also check out
www.madridman.com He has quite a bit of information focusing on Madrid, and also has a talk board similar to this one.
Hostelling international has a web site you should be able to track down. They usually offer rooms at $12 - $15 a night, but cleanliness can be spotty.
I looked into some university housing, but my length of stay was too short--I think they want people that would be there at least a week or more. The website with a list is at
www.barcelonaturisme.com/turisme/exp/ing/ap05-9.htm
I've got a couple of nights reserved on the coast away from the big cities, and comparable rooms are going for 25-50% less than in Barcelona. You might look at a map, see what's appealing, and poke around on-line.
Finally, give some of the general sites like yahoo travel, expedia, and orbitz a try. I'm splurging my last nights, and saved $50 a night on a very nice room in Barcelona via expedia, vs. the hotel's own web site.
Good luck, and have a great trip!
JP
[This message has been edited by j379pa (edited 03-14-2002).]