You lucky devil!! You are going to Llanes for a week, and the Picos....I'm tortured with envy. We stayed for 3 weeks in nearby Pechon, and we went to Llanes many times.
1. Try Hostal Aquilar in Madrid. You can get a spacious Quad room--really 2 rooms, with a huge bathroom, centrally located, clean, cheap with a nice staff and internet access. But that still won't fit 5, so I suggest you put mom-in-law with those sweet kids and get a double for yourselves.
2. I've never been to Vailladolip but Leon is a must see. However, Leon is not exactly on the way to Llanes from Madrid--that's a rather odd route. You'd do better to go through Burgos (that's a great overnight stop) then N627 to Aguilar do Campo then N611 to Torrelavega, then N634 west towards San Vincente de la Barquera, continue on to Llanes. The whole trip should take you 6-7 hours at most not including stops. Of course, you could go via Leon and Oviedo to get there, and return via the above route.
Don't miss San Vincente de La Barquera, Santillana del Mar and Comillas. But Llanes is the best!! Make sure to find Playa de las Cuevas (west of Llanes) and take a walk north of the beach.
The best guide book for that area in my opinion is Insight Discovery's Northern Spain. You might have to order it on line. Take some of the recommended drives in the mountains of Cantabria.
You lucky lucky person.....have a great trip!