South of Spain in 20 days

If traveling by train then Toledo is out of the way because you need to go through Madrid to get there, then back through Madrid to head south. However, Toledo is very much worth visiting. Since you prefer to travel by train others can better address your other questions.

If you've already seen the Alhambra and you know that you love the beach, I think I'd chose Malaga. On our last trip, we didn't find Granada to be as interesting as our first trip there - especially since we weren't interested in seeing Alhambra a second time - especially for 4 nights.

Others might suggest alternate beach options as well.

It sounds like a great trip! We really enjoyed lunch at the market in Cadiz! Lots of good seafood options!

Yes, Toledo is worth a visit but consider visiting at the end of your stay, especially since you have to go back to Madrid to get to Cordoba. You mentioned you’re spending your last two nights in Madrid. After your first night take a direct train to Toledo and then hop on a bus to Plaza Zocodover. Toledo is a great day trip option from Madrid.
Have you been to Granada yet? If you weren’t bringing the kiddos I would say, go there but children love beaches more so than historical sights. However, Oct brings fall like weather so getting in the water might not be too inviting. I liked Granada more than Sevilla. It sounds like you're leaning more towards Marbella so go to the Costa del Sol instead.
I wouldn’t rent a car for the entire duration but if you’re going to Jerez a car would work best since you would have to rely on a bus since trains don’t stop there.

I'd definitely carve 2 or three nights in Granada into that. I'd drop Toledo—it's nice, but seems like a diversion from an otherwise all Andalucia focus, and as others have mentioned it requires an actual, physical diversion in routing.

I’ve just noticed that your arrival and departure dates exactly match mine for my forthcoming trip, except I’m flying in and out of BCN.

So you have 19 nights.

I would reorganise a little, if possible, and head straight to Cordoba after arrival, leaving Toledo for the back end from Madrid. This enables stays in BOTH Marbella and Granada.

Arrive Madrid Sep 29
Cordoba (3 nights) with day trip to Jaen
Sevilla (4 nights)
Jerez de la Frontera (3 nights) with day trip to Cadiz
Malaga (3 nights)
Granada (3 nights)
Madrid (3 nights) with day trip to Toledo
Depart Madrid Oct 18Get

First, congratulations on timing your itinerary by nights, rather than by days -- it makes the itinerary so much easier to evaluate. I hope other "posters" will make note of this.
Second, some very direct answers to two of your questions:

"Is Toledo worth it?" Yes it is. The only question to ask is whether you can squeeze it into a tight itinerary. But Toledo will always be "worth it."
"Is this TOO much jumping around?" Yes it is. But in being so, it's pretty typical of the itineraries that get posted here. If not relaxed, it will at least be feasible. The weakest part, to me, seems to be two nights in Cordoba. That means only one full (i.e., non-travel day), and apparently you will be spending that day in Jaen. If Jaen is on the train line, you may want to consider replacing Cordoba entirely with Jaen. A lot of people will howl at this, since Cordoba is a great historic city, a so-called "must-see" -- but face it, in your itinerary you're probably not really going to "see" Cordoba, but just glimpse it.
Finally, despite having made several trips to Spain, I haven't yet seen Granada and Malaga, so I can't authoritatively help you with that dilemma; but I'm a great advocate of thinking for yourself, and doing what you want to do, rather than following the crowds; and since you have already declared a great interest in some time on the beach, I would advise Malaga.

I agree that 2 nights in Cordoba when you want to take a day trip to Jaen isn't a great idea. I'd fix that by adding a night to Cordoba.

Do you really need 4 nights to go to the beach when Granada awaits??

Getting to Toledo by train always means starting/ending in Madrid or traveling through Madrid, because Toledo is on a spur railway line. It's totally worth it. Trains between Madrid and Toledo take just 33 minutes.

You'll save considerable money on many of your train trips (this doesn't apply to Madrid-Toledo or Cordoba-Jaen) by buying tickets in advance. The cheapest tickets will be non-refundable and essentially non-changeable, so you'll need to weigh that cost savings against the risk that you'll need to change your itinerary after buying the tickets.

Another issue with waiting is that Spain's express trains (AVEs, etc.) can sell out, including trains to Toledo. They're not likely to sell out really early, but they may sell out by the day of travel or a bit earlier.

Regarding the beach: maybe add a night to Jerez and day-trip to the beach from there? Cadiz itself has good beaches, or you could try Chipiona if public transport works out

With my husbands bad knees and after really thinking it over, I really need to narrow this down a bit just in case hes just not feeling up to so much. I much rather add day trips that move around so much. We have done this in the past and it was a lot then so 4 years later it might be just too much.
WE leave the US Sept 29 and arrive in Madrid Sept 30. We depart on Oct 18.

This is what I have narrowed it down to

Sept 30 to Oct 4 Cordoba (day trip to Jaen) (4 nights)

Oct 4 to the 8th Seville (4 nights)

Oct 8th to the 12th Jerez de la Frontera (day trip to Cadiz) (4 nights)

Oct 12 to the 16th Malaga (4 nights) (Beach time maybe in Marbella area)

Oct 16th to the 18th (2 nights) Madrid to go home

Does this seem more reasonable?

Toledo is definitely worth at least a day. We did it on a day trip from Madrid. Also, Seville is wonderful.

We did Malaga and were not impressed with the Costa del Sol beaches. Sorry, why pay to go to the beach in Europe when there are better beaches in Florida, California and the Caribbean.

WE have been to Toledo before.. Malaga was an option just bc years ago I went to Marbella and it was so beautiful to watch to see all the glamour in the downtown area. What do you suggest?

I think your revised itinerary, a couple of comments above, looks good. Though it skimps on Madrid, you've allotted a decent number of nights to the other fine destinations you chose. I, for one, wouldn't change it further.

I agree! I think that your new itinerary is great!!

I would definitely prioritize trying to make it to Granada, though I know it is subjective, as we're all different and like to do different things, etc. This noted though, when we traveled throughout Spain for approximately three weeks in 2016, our visit to Alhambra was among one of the highlights, of which there were many. We did both the day and night tours of Alhambra ~ both stunning and unique in their own ways; the first tour we took was by night, and we're glad we planned it that way. Undeniably though, if your time is limited, do the day tour over the night tour, even though the sunset we watched over Granada from up there has stayed with me, to include was my iPhone wallpaper for a very long time. As we left Granada (by car), we drove to El Torcal de Antequera ~ it wasn't planned; we sort of "stumbled" across it. On a clear day, you can see Malaga from up there. Otherwise, in that (general) area, we also checked out Ronda, one of Andalucia's beautiful White Hill Towns. Very glad we did that too. Have fun!

I guess with all the comments my last question is should I substitute and go to Granada INSTEAD of Malaga?

I liked Malaga, but skipping Granada when you have enough time to go there is...odd; it's one of the top sights in the entire world. But we are all different; maybe you really will enjoy beach time more.

I just noticed in your one comment that you said your husband has bad knees ~ certainly be prepared for a lot of walking when visiting the Alhambra in Granada. Totally worthwhile in general, though if someone has mobility issues it seems it may be something to consider. I can understand being torn about not visiting Malaga too ~ we wanted to go there as well, but since we live near the beach/ocean (Miami Beach), we decided to prioritize other destinations/experiences in Spain than going to the beach there, even though I'm sure it is both lovely and different than where we live. Good luck in making your decision.

While we enjoyed Malaga very much, I would skip Malaga and go to Granada instead. The Alhambra is magnificent and one of the most impressive and beautiful places I have seen. If your husband gets tired, just take your time wandering through the Alhambra. No need to rush. There are benches where you can sit and relax. In fact, it's better not to rush. Savor the beauty!

Im so sorry to be asking so many questions but Im a little confused again. After looking at so many bookings, I cant seem to find anything I like in Jerez de la Frontera. The horse shows (which is why Im going) seem to run at odd times Im thinking it might be best to do these shows from another place and skip staying at Jerez.
We can maybe do them from Sevilla? We can rent a car in Seville and make the 2 drives to see the dancing horses and the tour. Maybe even drive to Cadiz.
Im thinking to rearrange the schedule again so that I could be in Seville between Oct 4th and 10th to be able to do the horse shows on a one day excursion, this way I could add Malaga and Granada.

Something like:

WE arrive in Madrid Sept 30 then right off to Cordoba
Cordoba 4 nights
Sevilla 6 nights
Malaga 3 nights
Granada 4 nights
Madrid back to leave 1 nights

Arghhhh My head hurts.. LOL

THank you all that have responded...

I'll put in a good word for Jerez de la Frontera, one of my favorite places in Spain, even though perhaps it can't compete with some of Spain's more celebrated cities. I visited Jerez for a few days in early December (2019), which is not a good time to judge its "tourism" character; but all the same it seemed, as far as I could judge, not to be an overtly "tourist" city -- one of the things I liked about it. To use an old tourism cliché, Jerez seemed to me more like the "real Spain," as opposed to "tourist Spain." Also, I happen to like flamenco music, and Jerez did seem to be a real flamenco town. I had only to walk around the right areas in the late evening, listen for it, and then slip into whatever humble tabanco (sherry bar) the music was coming from. I also heard flamenco coming from speakers on lamp posts and in cafes, and on a couple of occasions people in adjacent side-walk cafe tables broke briefly into flamenco song or dance. In addition to this, Jerez has a very quaint and authentic medieval center.
If any of this appeals to you, you may want to give Jerez a second thought. Despite making several trips to Spain, I haven't been to Granada yet (which seems to be the competing city in your itinerary), but of course I know what's there, and what a great city it is; in fact if someday I find myself ready to follow the crowds again, I may go there myself.