We will be in Toledo then need to get to Madrid airport to spend the night for a flight the next day. Is there a train that goes to the airport form Toledo? Or should we do a bus? Any airport hotel recommendations?
You can catch a 33 minute train ride in Toleto on Renfe to the Port of Atocha.
There you catch the C10 Metro to Aeroporto T4--31 minutes.
Madrid Airport doesn't have any hotels within the airport, however there are about 12 properties about a mile away. I suggest the Ibis Airport Hotel for the moderate price. You can catch a taxi from the T4 terminal where the Metro station is located.
I agree with David about no hotels near the airport. What I did was to get a room near a metro station for the line that takes you to the airport. As it turned out there was also a bus stop nearby that also took me to the airport.