18 days in Portugal/Spain/Morocco - use EuRail pass?

Rail passes don't really work well financially for Spain. The AVE requires seat reservations and renfe offers good discounts for advance purchases. And in many cases, flying or the bus makes more sense than taking the train. For example, most people fly from Barcelona to Granada or Sevilla. The bus from Genada to Sevilla is a better option. There is only 1 night train between Madrid and Lisbon so flying that route is a better option. Trains in Portugal are very cheap. I'd start by deciding where you are going and figuring out your route and then how you might get from place to place.

Our tentative itinerary is: Madrid - Barcelona (quick side trip to Andorra) - Brief stop in either Cadiz/or Grenada - small town in southern region - Morocco (Marakech) - Seville - Lisbon - Porto - and back to Madrid. So there it is. I wonder if we should rent a car for the trip instead, but am unsure if the hassles involved outweigh the freedom. Also for such a lengthy trip the rental would be around 450, plus gas and parking for all those days...

You can get bus schedules and fares here:
http://www.movelia.es/default.asp

My thoughts: Madrid-Barcelona: train (AVE) You might have to drive to Andorra, not sure on transportation to there Barcelona-Grenada: fly Southern Spain/Morocco: combo of bus, train and ferry or rent a car and just ferry to Morocco Sevilla-Lisbon: fly Lisbon-Porto: train
Alternatively you could drive with stops at Sintra and coastal sights along the way Lisbon-Madrid: fly but consider flying open jaw into Madrid and home from Lisbon to avoid backtracking to Madrid I think a car for the whole trip would be too much driving and the drop-off fee for renting in Spain and returning it in Portugal is very high. But renting a car for portions of the trip could be worthwhile, especially with 3 people. Flights between most major cities are very reasonable, no more and sometimes even less than a train ticket.

Thanks for all the input. Using a variety of transportation makes sense to me. Regarding flying from city to city, say Barcelona to Granada - how easy is that process for tourists with American passports? How long does it take from checkin to arrival in general? We're using carryon only, of course

Flying is no more difficult than it is in the states. You won't need to show your passport (other than just as an ID) since you are within the Schengen zone. Most of the value airlines have very strict luggage policies so expect to pay extra even with just carry ons. But still cheaper. Timing would be the same as flying in the US - I'd be sure to allow 90 minutes.

Ignore the standard Morocco advice you'll get here to take the ferry - a waste of time and money. Fly instead. Lots of incredibly cheap flights from multiple Spanish cities, and you bypass all the hassles of the coastal bordertowns, landing in Marrakech or Fes, which is where you want to go anyway. Consider flying to Marrakech, train to Fes, then fly back to Spain from there (or vice versa). Forget the rail pass - it's completely useless for Portugal. Best to just do point-to-point tickets for Spanish trains. For the connections to Portugal, consider flying.

Use Whcihbudget.com to search for the lo-cost flight options. Again, pay very close attention to luggage restrictions. When they say you can only bring one thing on the plane, they mean ONR only; no purse and a back-pak. We have used the lo-cost airlines in both Spain and Portugal with great success.