Too much big city, Spain & Portugal??

I think that you've picked some great destinations with a mix of smaller cities and larger ones--of the smaller cities, my favorites are Granada, Santiago, Porto, and Coimbra--Madrid and Lisbon and great larger cities. You'll have to calculate travel time and available days so that you're not too ambitious with your itinerary.

I think you need to drop about half the cities. As I count you are trying to hit 9 locations in 16 days over some long distance. You will spend way too much time check in/out of hotels, packing.unpacking, finding train stations, finding hotels, riding trains, etc. You will not see much beyond the inside of trains and train stations. And train service is not great in some of those areas.

Personally, I think you have too much....period. You have 16 days on the ground and nine stops planned. With all the transportation involved, you'll be lucky if you spend a full day in each location. You can get a cheap fare on Ryanair from Madrid to Santiago if you book far enough in advance (and they actually use the main airports this time!;)). However, travel connections from Lisbon to Sevilla, for example, are very poor, and will take you most of a day. As well, bus/train links between Santiago and Oporto, Sevilla and Granada, and Granada and Cordoba are about 3 hours each.
With all the things to do and see in and around Madrid itself, that city is worth at least three days. Sevilla's worth 2, as is Lisbon.
I would suggest you make a decision between a Madrid-Santiago-Lisbon-Madrid loop, or a Madrid-Cordoba-Sevilla-Granada-Madrid loop. That will allow you to concentrate on enjoying each stop, rather than rushing from place to place. You WILL be back!Train tickets can be purchased cheaply in advance at www.renfe.es for trips in Spain.....bus travel is also very inexpensive, and you can check it out at www.movelia.es. For accommodations, you can, of course, use hostels, many of which have smaller, more private rooms these days. But there's also a class of 2-star hotels in Spain called "hostals," which are a good bargain. For chain hotels in bigger cities, check www.accorhotels.com . It's a large worldwide chain based in France, and its Ibis and Etap hotels offer clean, modern accomodations at good prices, all with ensuite bathrooms...their Formule 1 hotels are even cheaper, but the bathroom's down the hall.

There is no overnight train from Lisbon to Sevilla....you essentially take the overnight train from Lisbon to Madrid (which can be expensive and books up quickly) then the AVE to Sevilla. The best you can hope for on the train is 15 hour journey. Even dropping Cordoba for one more day in Granada won't add appreciably to your journey...Cordoba, in a pinch, can be done by leaving Sevilla early in the morning and stopping over for several hours on the way back to Madrid.
I agree, it's too much. If you're committed to Santiago, then do the northern loop....if not, consider the southern loop....but you'll push yourselves too much if you try to include all of this at once.
Slow down so you have time to actually enjoy yourselves....sometimes, doing less means doing more! ;)

Norm, Thanks for your input. We have the flight to Santiago booked. We plan to take the train from Lisbon to Seville overnight. Those seem to be our long hauls. But I still worry about it being too much. My husband hasn't been to Europe and we just want to see a lot. Don't quite know what to cut out. Maybe omit Cordoba at the end and stay longer in Granada.
We tried to mimimize one night stays.