Hello, pajo2! Welcome to our ALL SPAIN Message Board.
Just so's you know, no one here can give you hard-and-true advice, just suggestions, recommendations, and share our experiences. Once you go to do your thing, trust me, you'll need more (or less) than what we tell you. In fact, even if you follow the guidelines of things you must supply, once you take them to the counter, you'll lack something which wasn't on the list. Plus, I applied for my residency more than 5 years ago and the details, now, are sketchy and have likely changed since then. Plus, you're European by birth and I am not so the rules might/would be different for you.
I'm positive you cannot use a hotel/hostel as your address. You need to have first established a mailing address to where they can send you something (in several month's time) in order to verify that address. Maybe a friend can put your name on their mailbox.
I doubt you have to be registered on the population register. That wouldn't make much sense if you're not officially living here yet (legally).
For first-timers, I think you you have to just show-up at the local office with all your documentation, forms filled-out and verified, copies of everything, etcetera. Prepare for long lines and to wait in line for several hours - before they close at 2pm (or 1:30pm??).
To which website were you referring above? Here's a couple to peruse:http://www.mir.es/http://madrid.angloinfo.com/countries/spain/residency.asp
for Barcelona information, Transportation, Lodging, & much MUCH more!
Curious about what could POSSIBLY be inside the brain of MadridMan? Visit MadridMan's Madrid Blog