From Madrid I am going South and West to Portugal then North and East back to Madrid. What should I expect in weather and how should I pack?

That depends on when you will be travelling.

If you are talking the next few weeks, Madrid has been sunny and cool - around 10ºC / 40ºF. It should start warming up soon (I hope) but won't get hot. We've had some rain, so do bring an umbrella.

Layers are probably the best bet. I normally wear a light sweater and leather jacket

First 3 weeks in March

Carpathe writes: Some lightweight raingear might come in handy (I carry an Eddie Bauer Nylon Rain Parka). In general, March weather is cool (highs 16-20 Celsius (60's F)) with some showery activity. It may be windy on the Portugal coast - another use for that nylon rain parka.
BTW
MAD for Madrid: 10 Celsius is 50Farenheit, not 40.

Brrrrrr.....Right now it's snowing.

I'll be there Friday so I hope the snow goes away!!! I am looking forward to leaving the snow behind and seeing the sun shine!!!! We had a huge amount of snow last weekend!!