What I'd suggest is that you pick one country that is a definite and get hold of a comprehensive guidebook to that country. You can borrow a not-quite-current one from your library for this part of your trip preparation. Rick's book are very good once you've decided where to go, but he does not attempt to provide full coverage in most of his complete-country books.
Skim through all the sightseeing stuff in the book. Make lists of "I really don't want to miss that!" sights and of "Sounds cool if we are in the area" sights. Don't forget the "being there" aspect of Europe's fabulous historical cities and towns as well as the scenic rural areas. Allowing for the fact that every time you pick up and change hotels it will probably take you at least half a day, how much time do you think you'd need in just the "Don't Miss" sights in that one country?
I can tell you that any one of France, Spain, Italy or Germany will probably provide enough sights to fill 40 days, just by itself. So now you have to decide whether you want to focus exclusively or almost exclusively on that one country (with maybe a few quick cross-border runs if it's convenient) or you want to cover just part of that first country and extend your range into another (ideally neighboring) country.
Since you're planning a summer trip, I'd encourage you to give some thought to the weather. You may want to plan places to escape from the heat, such as these:
Italy: places at altitude in the Dolomites
Spain: the far north from the Pyrenees to Galicia
France: Normandy, Brittany, and places at altitude in the Alps.
Germany: the far north (Berlin can be very hot, you may well have to go farther north)
Portugal: the north may be temperate enough; I'm not sure.
Amsterdam: probably OK
If you find your list looks a lot like this: Paris - Amsterdam - Rhine/Moselle - Munich - Alps - Berlin - Venice - Florence - Rome - Nice - Barcelona - Madrid (which would surprise me greatly, but everyone is different), I'd still say you're trying to cover too much territory. Plus the car would be a mistake for most of the trip. Trains go much faster than cars between major cities, you don't have to pay to park them, and there's no risk that you'll receive a flurry of very expensive traffic tickets after you return home.
An issue to consider when you are a group of four is that the common advice is to rent the smallest car that works for your group, because country roads and streets in historic cities can be very narrow, plus there's the parking problem and $$$ cost of fuel. But a car adequate for four people may not have enough luggage space for four people's bags. Now you have a problem, because when you stop in the middle of the drive to your next hotel (for lunch or to sightsee), you absolutely must not leave anything visible in the car. Theft from parked cars, especially at touristy destinations, is an issue in Europe as it in the US. Will everything fit in the trunk of that nice maneuverable car you rented?
Basically, what I'm saying is that it's prudent to have very good reasons to travel by car in Europe, not just to do it because that's what American do at home. In general, the less territory you cover, the more likely the car is to be a good idea.