I have been to Spain twice (though the first time was in 1994!) and Portugal once. I second a lot of the recommendations here to see Barcelona, Madrid, Seville, Cordoba, and Granada. I also want to recommend Alicante if you need a day or two at the beach. In Portugal we only went to a great small town called Ericeira as surfing was the priority but we did also visit Sintra.
DD studied in Cadiz, at the southern tip of Spain, as a 10th grader. DH picked her up and they drove all the way up the coast to Barcelona in a rented car. It was a wonderful trip! They liked having a car so they could explore wherever they wanted to go.
The one activity that was a bust was the ferry to Morocco. As soon as they stepped onshore, they were inundated with people wanting to “help.” It was overwhelming, so they turned around and took the next ferry back to Spain! That was an expensive few minutes…