We will have limited shopping time while in Madrid but I want to make sure I come home with
certain items - for example, espedrilles (do they go by another name in Spain?), lladro, shawls... Where could we shop "easily and reasonably?" Also, what else would you recommend that we bring back as souveniers from our trip?

Espadrilles are called alpargatas. If you go to the Plaza Mayor, head south out the Calle Toledo exit (in the southwest part of the plaza. On the right side of the street there is an alpargatería in the first block. On the second block of Calle Toledo there is another one on the right corner. Of course there are many more, but these will be very easy for you to get to.