Need help with itinerary in Spain.

Your itinerary essentially means you have eight full days on the ground....nowhere near enough to cover all the ground you suggest.
You'll probably have to choose between Madrid and environs, plus Andalucia, or Madrid and environs and the Barcelona area. Personally, I would pick the former. I would spend 2-6 March in Madrid, giving you 2 full days to check out the city (the first day will be pretty limited, with jet lag) and the chance to make day trips to Toledo and Segovia.
Take the high-speed AVE to Sevilla on the 7th and stay there 8 and 9 March. The on the 10th, take an early train back to Madrid and stop in Cordoba for a few hours to visit the sites there.
Book all your train tickets in advance at the aforementioned RENFE site to get the best deals. While there are no price breaks on Madrid-Toledo and Madrid-Segovia, you might as well book them too, to ensure you get seats on the trains you want, and to avoid standing in potentially-long lineups at Atocha station (for Toledo) and Chamartin station (for Segovia.)
If you're flying back direct to the U.S. on the 11th, get a hotel close to the airport, or be prepared to spend about 35 Euro for a very-early cab ride to the airport.

Agree 100% with Norm, he's right. You don't have enough time to do all that, and if you choose to try to squeeze in Barcelona, you'll miss out on top-notch attractions in/near Madrid and around Andalucia. It doesn't make any sense to do that - save Barcelona for another trip.

People often think, "Spain? I just gotta see Barcelona!" but on a short trip, you might as well consider Barcelona to be in another country (Catalonians would not disagree, BTW). Including Barcelona in such a short trip makes no more sense than it would to include Rome or Paris - it's geographically the "odd man out" in Spain. The rest of the good stuff in Spain is clustered at the other end of the country. Stick to that.

Norm's advice will produce a better trip. You would be wise to take it.

thanks for the good advice

I was really hoping to see Barcelona. I am a big dali fan. Maybe I should spend less time in Madrid and a couple days in Barcelona

As I said earlier, with eight days on the ground, you'll probably only have time to do Madrid-Andalucia or Madrid-Barcelona....not all three. If Barcelona is a must-see, then split the time with Madrid, so you can still visit places like Segovia, Toledo, Montserrat, and Figueres.

I'm a big Dali fan, too, but I'd still say it makes more sense to do the things closer to Madrid. They're at least as enjoyable as Barcelona, and you don't have to go waaaaay out of your way to get to them.

Consider Barcelona to be in a different country. Would you go all the way to paris or Rome on this trip just to see Dali stuff?

The way I look at it, you're going to be in Madrid. See the amazing things that are accessible from there (and nearby Andalucia). Don't miss them - they are some of the best things in all of Europe (most Americans have no idea). You can go to Barcelona (or Paris or Rome) on another trip.

You have convinced me to skip Barcelona for this trip. With regards to a railpass, how many days would you buy or would it be better to just buy tickets for the individual trips?

You can go on-line right now to purchase advance tickets at up to 60% off at www.renfe.es . It's mostly in Spanish, but you can navigate it with a little help from translate.google.com or similar websites. Or PM or post here for help. Far better than a railpass, for which you'll need to get reservations in addition, in any event.