Itinerary Help New Years Trip to Lisbon

A few suggestions......pick-up your rental car as you leave Lisboa. Having a car in the city is more of a problem than a solution. Public transportation in Lisboa is very good and quite inexpensive. I like Evora and I'd recommend you add it to your travel list.
I really like a Fado club on Rua do Duque called "Duque da Rua" - near Rossio station.

If you didn’t have friends in Faro, I would suggest skipping the Algarve at that time of the year. But, if you must visit the Algarve, I would suggest spending a minimum amount of time there and the majority in Lisbon, Evora, Sintra and maybe Coimbra. While the beaches and rock formations in the Algarve, are pretty spectacular, there are many other areas that are much more Portuguese. And, there are lovely beaches in the Sintra area and north - so pretty close to Lisbon.

Be prepared for rain a portion of the time you are here. But, the sunny days in winter well make up for the rainy ones!

I agree with the earlier advice, winter is not a good time to visit the Algarve. Having said that, with your interests, and with a few days in Faro, I would spend the rest of the time in Lisbon and nearby day trips (Sintra, Cascais). Check out the TripAdvisor site for museums in Lisbon, more than 100 listed, many of which are of excellent quality. Lots of good fado in Lisbon, but not in the other cities on your list. Also, many late-night dance clubs in Lisbon.

Thanks Blue439 for your advice on the rental car and Fado club. Thanks kathryj for your insight as well. Captvic4, I think we'll be doing just that; spending most of our time around Lisbon after a visit to Faro and nearby cities. Thanks again!