Amsterdam to Munich, where should I stop? Koblenz? Bacharach? Heidelberg?

I'm no expert but Heidelberg is a University City (Students) with good public transportation (bus, train and Strassenbahn). It is on the Neckar River. Mannheim is not too far away. I lived in Heidelberg for two years, 15 yeas ago and loved it. Many unique clubs and cafes to visit ( loved the Großer Mohr und Kleiner Mohr Kneipe). The longest shopping street in Germany is there. The Castle/Palace and overview is nice. The Schwetzingen summer castle/palace and gardens are not too far away: http://www.schwetzingen.de/pb/site/Schwetzingen/node/666562/Len/index.html

There is the Philosopher's Walk and Kloister and Nazi stadium ruins across the Neckar. May - June would be Strawberry and Spargel (white asparagus) season. This is one of the warmest areas in Germany. There are Roman ruins in the area too. Lots of castle ruins along the Neckar that you could reach by train or bus (Vorderburg not too far away): http://www.neckarsteinach.com/

Nice Park areas along the Neckar. Mark Twain visited here. Just a quick search and no experience with these places: http://www.jugendherberge.de/en/youth-hostels/heidelberg%20international10/portrait

http://www.hostelheidelberg.de/en/index.php

https://maps.google.de/maps?q=Hostel+Heidelberg&oe=utf-8&gws_rd=cr&um=1&ie=UTF-8&sa=X&ei=1b7sVJ7lHNHjaqmygeAK&ved=0CAgQ_AUoAQ&output=classic&dg=brw

http://www.tourism-heidelberg.com/destination/index_eng.html

"I am really interested in seeing at least one Castle, and the Rhine looks so beautiful. We are on a fairly strict budget..."

The Bacharach hostel has been cut up into rooms for hostelers of course - sort of like they did to the grand movie houses of the early 20th century when they multiplexed them :(

Marksburg Castle is actually on the Rhine in Braubach a 10-minute train ride from Koblenz - it's a great castle for a tour, never destroyed like Heidelberg's (which has been rebuilt and now is referred to in German as a palace, not a castle and a much better castle experience IMO. Marksburg will take up much less of your time than getting to Moselkern, hiking to the woods to Eltz and back, and returning to the Rhine.

Koblenz isn't "so beautiful" - you can tour Marksburg Castle that first afternoon. The TI office will hold your bags. I'd look for a place to stay in Braubach or in one of the other Rhine villages. There's a hostel if you take a train south about 45 minutes (housed in a historic building in Kaub.) It's used a lot by hikers doing the Rheinsteig Trail. Or you could take a train south to St. Goarshausen (22 minutes) cross over on the ferry to St. Goar and stay there for 2 nights. I had an apartment there for €30/night. Small but fine for two w/ a kitchenette and a view of the river.
Geissler apartment
Other St. Goar room options

St. Goar is very central to the other west bank Rhine villages. The next day you can visit Bacharach (10 minutes or Oberwesel (5 min.) or Boppard (10 min.) by train. Rheinfels Castle is right in St. Goar. Two can use the VRM mini-group ticket to get around for a day for €21.80.

Wow that is interesting... so maybe I should plan a 3 day trip down the Rhine (Koblenz - Bacharach maybe) then catch a train to Munich?

Thank you both for the info so far!

If you go with Heidelberg, there's about a dozen or more castles on the Neckar river upstream. However, the one in the best condition, Schloss Zwingenberg, isn't open to the public.

Re: Bacharach
I would first check to see if there is space in the hostel. It fills up quickly and far in advance. If it is filled, there are rooms in town for a similar price. Check the excellent town website.
www.bacharach.de

You know there are cheap tickets to be had for the trains as well as cheap bus tickets. For the train, you can use Länder tickets, Happy Weekend tickets, and Quer Durch Deutschland tickets. Long distance buses are getting really popular too and the Deutsche Bahn is struggle to compete with them. For those on a budget and with a bit of time to spare, riding a bus or a regional train is going to save you lots of money.

http://meinfernbus.de/en

• Länder Tickets - These are a fantastic deal if you do not mind riding the slower, regional trains. A plus is that the Regional train routes are usually more scenic than the faster ICE routes. Each Land has a Länder Ticket available but with different prices and sometimes different rules, and you can buy them from the DB ticket machines at the train stations. Large train stations, like the Frankfurt airport or the Hauptbahnhof will sell Länder tickets for all of the Länder. The touch-screen DB ticket machines switch into English and are easy to use, but you can also buy these tickets from the DB counter for an extra 2 euro. Prices range from 21-34 euro depending on the Land you are traveling through, as a beginning price with each additional person being a few euro more, for a total of up to 5 people. Some Länder will let all of your children or grandchildren be included for free. The DB website will list this. Hessen is not one of them that lets all the children ride free, only up to 3 of your own children under age 6. The Hessen ticket is valid for 1-5 persons and costs 32 €.

Single tickets are also available for 23-32 €. You can use the Länder Tickets Mon-Fri after 09:00 until 3a.m. and on Sat, Sun, or Holidays the entire day. For many of the Länder, like in Rhineland Pfalz, it is different, the 1st person pays 24 € and each extra person, up to 4 people, pays another 4 €. Bavaria is similar, 23 € with each extra person an additional 5 €. Check the DB website for the Länder you will be visiting.

Make sure to print your last name on the ticket before getting on the train. If you are traveling through more than one Land, you can purchase tickets for each Land at the same time from the DB ticket machine at the Frankfurt Hauptbahnhof and airport and a few other select large cities or at the counter. These tickets are also valid on S-bahns in most cities and local transportation in many. You should check the DB website to get details before you travel. You cannot use the ICE or IC trains, but the Länder Tickets are valid for travel to some border cities, like Salzburg.

• Happy Weekend Tickets - (or in German, Schoenes Wochenende Ticket) This 40 € ticket can be used for one day travel on either Sat. or Sun. through the whole of Germany and is valid for up to 5 people, with each additional person costing 4 €.

• Quer Durchs Land Ticket- (or in English, All Across Germany) can be used weekdays after 09:00 and are similar to the Happy Weekend Ticket. Regional trains, 2nd class only. Buy this from the DB ticket machines just like the other tickets or from the DB counter. Price is 44 euro for the 1st person and 8 euro for each extra person, for up to 5 people total.

Wow that is very helpful, I will have to look into that.. so many options my brain is going to explode, thanks everyone.