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Questions about budget trip to Spain?

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This will be my first trip to Spain. My friend and I (Both 22) are fresh out of college and looking to only spend $1500/person including the flight from Boston. We originally wanted to take the train all over Spain, but with our budget and time frame (7-10 days), we came up with three more realistic options:

1. Fly in/out of Seville, visit Algeciras and day trip on ferry to Morocco (or spend 1 night in Morocco?)

2. Fly in/out of Madrid, basically hang out in Madrid the whole time, stay in or 2 hotels, not venture too far from the city
-or- do the same with Barcelona?

I am not sure what to do/see in each scenario, or what the pros/cons of each would be.
Any feedback/advice/suggestions?

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