I recommend taking the train to Segovia (from the Atocha train station), 2 1/2 hours, spending the night, then the train back to Madrid, and then to Toledo (1/2 hour) as opposed to driving an automobile. Much easier, especially if you are flying from the states after a long trip. Driving in Madrid is not what you want to do!!! You can take the airport express bus from the Airport to Atocha for 5 euros, and it takes about 1/2 hour door to door.
Toledo, I recommend the Posada de Manolo B&B near the cathedral. Great location and first class operation.
If you drive to Toledo, you can not enter the town proper, but must park, and walk.