You can comfortably cover a lot of Spain and parts of Portugal in 5 weeks, but since September is still high season and busy at most of your destinations. You'll need to make plans now to set everything up. Some rental properties have a minimum stay required during high season, so you'll have to check around to see which ones allow shorter stays.

Have you considered working with a trip planner? Someone who knows what to do to make it all work smoothly? It might help take the edge off planning this trip in the short amount of time you have left before you leave for Spain.

I liked having a car with kids that age because they can nap while you drive. Can you imagine having them fall asleep on a train or whatever and then having to wake them for the final walk home? We would tour in the morning, have lunch, get in the car at naptime (our kids napped at 3:00 or so) and drive back to the apartment where we were staying.

I have traveled a bit through these areas and am very familiar with the 'challenges' of traveling with small children. These are my recs.
1) Rent a car. The flexibility and car seats trump the hassle factor many times over. If I were you, I wuold just rent a car for the whole time. Driving is fine, absolutely fine. You will end up parking the car while in Seville and Madrid but that is OK.
2) Go self catering when possible. Having a kitchen is helpful with the kidlets. REmember that it is difficult to eat dinner in Spain before 9:00 (unless it is fast food or pizza) so keep snacks with you.
3) In Seville, book a hotel with a pool. We stayed at the Dona Maria right by the cathedral. It has a roof top pool which was a godsend in heat.
4) WE loved the Legrono area but stayed in a tiny little village outside of it. I would have preferred Legrono but we as we were traveling with dogs, it was tough to find accomodation.
5)Head South and visit the Alhambra in Granada. Make reservations now as you do not want to stand in line with the boys.
6)We also visited the Alcazar in Seville and loved it.
7)Consider staying in pousadas when you aren't going self catering. These are renovated buildings of historical interest ie monasteries and castles. The boys will love it. Obidos has a nice one. In Spain, the equivalent is paradores and they are also wonderful.
8) After Seville, head west to the Algarve and rent a villa for 1 week. Take a break from the hustlebustle and wander the beaches in the afternoons and the villages in the morning. Pick up fish at the market and BBQ it at your villa. Drink wine. Relax and swim. Let the boys recharge. Visit Lagos, Sagres, Tavira and Silves while here. If it is hot, go up to Monchique.
9) Wander North, up to Porto, Coimbra, Evora, Marvao.
10) Double back (yes, I hate it too), drop the car and spend the final 3-4 days in Lisbon. See Sintra too.

Have fun!

I guess you come to Sevilla just in time to catch the final gala performance of the worlds most prestigious flamenco festival on the 30th of September. In the majestic Maestranza theater.

Flamenco is a very important part of Sevilla culture, and the final show is dedicated to the flamenco dance traditions of the city. With some of the world's best flamenco dancers, young and old, all from Sevilla. Tickets are on sale from today, and this is one of the events that will be sold out very fast. http://www.labienal.com/programa/la-punta-y-la-raz-un-paseo-por-el-baile-de-sevilla/
http://www.flamenco-world.com/noticias/bienal23052012.html

Video clips of some of the dancers in the gala performance:
Plain fantastic Pastora Galván, voted best female flamenco dancer last year by Spanish critics: http://www.youtube.com/watch?v=k2SBUcrJgeQ
Her father, living legend José Galván: http://www.youtube.com/watch?v=L6N3hlJLf0Y&feature=related
The protagonist herself, Rafaela Carrasco: http://www.youtube.com/watch?v=ktO_m7YXIMw
Powerful Rafael Campallo: http://www.youtube.com/watch?v=MZ_g1q47QgU
Wonderful Belén Maya has dominated the scene for nearly some 20 years, one of my absolute favourites: http://www.youtube.com/watch?v=0teWd0I8oAo

Could be a night to remember!

Online tickets for the gala performance on the 30th. Search for "La punta y la raíz. Un paseo por el baile de Sevilla". I've used this service tens of times, and it works perfectly:
http://www.generaltickets.com/

Wow. Thanks to all. Great advice.

Based on some of the feedback we are definitely thinking of having the rental car for the entire trip. Will make it so much easier to get from A-B and have everything just ready to go (versus waiting around to buy tickets, pack everything up nearly for the train). Thanks Slojan2 and Monica.

Slojan2 - I am interested in your feedback. Makes sense to spend some time in the Algarve area given we are driving through but I thought we would be too busy to stay there for a week. I had a general rule in my mind of 4 nights accommodation in each location (and a max of about 6 destinations) - but perhaps that isn't quite right - maybe we can fit more in as you suggest? Were you suggesting stays overnight in the places in Portugal (e.g. Coimbra?) or just visit them on the way to Porto?) Can you recommend how long to stay in the following:
- San Sebastian
- Seville (day trips to Granada / Cordoba ??)
- Porto

Also, where would you suggest we stay in the Algarve Region?

Robert - This is probably a silly question but I have not heard of a trip planner in Aust. We have travel agents but they don't really do detailed planning like what I need. There may be some private consultants that do it but I will need to investigate. Would make it easier..... both hb and I work full time so hard to squeeze time in to organise this trip!

Kimhe.... don't think we will reach Seville in time....

Thanks to all for the great advice so far. Was so excited to see your entries.

Hi...doing my early morning surfing on Fodors.
I can´t help so much with San Sebastian. Seville, I would allocated 4 days to, with one day being for a daytrip to Granada.

You have 5 weeks. I would suggest allocating 3 weeks to Spain and 2 to PT. If I am reading your plan correctly, 3 days in Barcelona environs, head over to Legrono, spend 2 days or so and then, 6 days up in San Sebastian area. Shoot down to Madrid and spend 1-2 nights and then, on to Seville for 4 days. I would skip Cordoba in this case. From Seville, drive to the Algarve. It is a 2 hour drive to the central Algarve. Rent a villa and stay put for 4 days to 1 week. You can rent a house in Sept for shorter times than a week. The only reason I recommended a week is because you just may be tired by this point and the area if fabulous for children. Rejuvenate yourselves. Drive North with a mid day stop in Evora. It should be about 5 hours to Porto, but doublecheck with googlemaps.com Spend 4 days in the Porto area, head back to Lisbon with a mid day stop in Coimbra. That is about 32 days of travel roughly.

I have noticed that you are looking for villas in San Sebastian. Staying for 1 week may be less expensive than 6 days overall. Some owners have a minimum of 1 week esp. in early Sept which some may consider to be high season. In the Algarve, there usually is a lot of flexibility due to the sheer number of villas available. Unfortunately, ours won´t be available but I will be around the area from July so if you want me to check one out, shoot me an email.

Hi Slojan2. The Algarve region is large with so many places.... where would you suggest we stay/base ourselves?

Thanks for all your other great advice.

I would recommend staying either in between Porches and Ferragudo (which is a bit more west than central Algarve) or the Lagos area. Lagos is much farther west, but it is a nice little city. It will be windier and cooler there, but the beaches are 'protected' by cliffs and the sand is coarser. There may be more undertow though, which is a detriment for the kiddies. We've rented places on Funchal Ridge which was lovely.

The area in between Porches and Ferragudo has many villas, still has the cliffs which are gorgeous for walking and has a ton of interesting beaches. It is warmer and a bit less windy, but the towns are not quite as nice. Ferragudo is charming though and still feels authentic. Carvoeiro is touristy. but if you rent a villa here, you can get away from the crowd. If you choose Cvo, rent a place on the west side of it. Porches is known for its pottery. If you like golf, this is the place to be too.

I would recommend renting a place south of the N125 and make sure it has a pool.

Vilamoura area is east of the above areas. Many love it here. It is seen as posher, but I don't like the beaches as much and the natural beauty isn't as great. (IMO) Good golf though and better restaurants.

Do not stay in Albufeira or Portimao.

About renting a car in Spain, I can only recommend it, not only for the reasons mentioned by posters above, but also budget wise. Train travel in Spain is quite expensive, (4 adults).
Writing that you will stay during the festival in San Sebastian, do book well in advance! Busy!

Hi deassube, I fully back the Albufeira/Portimao no-go statement!
Also a great place to stay in Algarve (with most stunning coastline and beaches) is Aljezur, in the west at a national park. Not much tourism, not overrun like Lagos and all the other places at the southern coast of the Algarve.