After much consideration and emailing. We've booked to stay at www.arthostal.com . We've reserved the "Big-little room" for 55 euros per night. Deposit was paid via Paypal. Hostal Martina Bailen would have been our second choice.

So our itinerary will be as follows:

12- 24/9 Follow the Vuelta a España .
24-27 Hostal Chelo (Antonio's) Madrid
27/28 Overnight Train to Barcelona
28-1/10 Arthostal Barcelona
1-14/10 Hotel Mádison Bahía Sitges.

Have you checked on flights. They are good prices on Air Europa and Vueling vs. night train

Thanks for that info. Vueling flights Come up at 30 euros each, which is an excellent price.
We prefer though to save our days by catching an overnight train where possible.

The "Costa Brava" train,should be around 50 euros for a bunk. Its not showing on the Renfe timetable yet. So I have to assume it will be running.