Jill...we favor The Egmond in Brugge. Delightful lodgings in it's own park...in the prettiest part of town..the Minnewater...a ten minute pleasant walk to the heart of town, very close to the RR station. Excellent, generous buffet breakfast and good sized rooms. We have stayed there and my daughter and her family at another time.
Here is their link:

http://www.egmond.be/uk/

We stayed in Cote Canal B&B and enjoyed it very much. An easy walk everywhere and right on a canal. Caroline is a lovely host. If you are physically up to it, consider renting bikes and riding to Dammes. It is 3 or 4 miles along a canal. The deli there fixed us a lovely sandwich to eat on the banks of the canal on the way back. Enjoy.

Another vote for Hotel Egmond-beautiful setting.

And another vote for Cote Canal. It's in the center of the old city overlooking a garden which, in turn, overlooks a canal. And a lovely interior.

In 2010 we stayed at the Loreto Hotel and are happy to recommend it ... a lovely little hotel which is located in the heart of Bruges with parking close by. http://www.loreto.be/en/index.asp

We stayed 3 years ago in a newly-opened B&B called B&B Galery Yasmine. It is a five minute walk to the centre square of Bruges, very good rates and the owner is the most gracious hosess you are likely to meet. She serves an amazing breakfast in the morning, which include egg, bacon, etc, even making her own bread and offering us her fresh pancakes. and is ever so helpful. The rooms and bathrooms are brand new, the beds so very very comfortable. On arrival she helped us park our car in her private garage, and then offered us cake and tea or her delicous home made hot chocolate. You can never beat this B&B. Her daughter is an artist and at the reception downstairs are her beautiful artworks.

You should look at up-to-date reviews on TripAdvisor and Booking.com

If you are traveling in peak tourist season you should also consider whether you prefer staying slightly away from the tourist-mob-ground-zero locations. Brugge is very small, so matter where you stay you aren't more than 10-15 minutes walking to the Grote Markt, but it is a world of difference in terms of ambience.

Likewise, if you are using Brugge as a base for sightseeing to other towns nearby, cheating your location on the side of town that is in the direction of the train station is a good idea, just so long as you don't book right next to the train station, which is not what you want.

Likewise, if you are using Brugge as a base for sightseeing to other towns nearby, cheating your location on the side of town that is in the direction of the train station is a good idea, just so long as you don't book right next to the train station, which is not what you want.

Jill..Zepp makes good point here, so I wish to explain that I probably overstated when recommending Egmond saying it was "very" close to the train station. Matter of semantics, I suppose. You can't see the station from Egmond, nor hear the choo-choo sounds. I promise.
stu

Thanks to everyone for your help. I am so excited about the trip!
Jill

Another vote for B&B Galery Yasmine.
A charming and wonderful hostess and B&B.
Extremely well located.
Have a great trip