We need help in picking a hotel location in Lisbon. We would like to be close or in city center. We are considering the Marques de Pombal Hotel near the Marques de Pombal Square on Avenida da Liberdade or the Lx Boutique Hotel near BairroAlto close to the waterfront. Are these good locations? Any hotel recommendations?

You are lucky in that Lisbon is a town with a wide choice of hotels with very good prices.
Do you havee a budget in mind?

We would prefer to stay under 160 euros but are flexible. However, I am having a difficult time figuring out a good location.

Chiado, Barrio Alto and Baixa are all good areas (safe/clean) and centrally located. Are you interested in having an apartment instead of a hotel room? If so, check out home away holiday rentals and ownersdirect.com. I have used both of these in Lisbon with success and I appreciate the comfort of being in an apartment rather than a hotel. And you'll definitely come in under budget.

I would stay near Rossio Square / Restauradores. Very central, close to metro, train and tram, safe.

I agree with both of the above suggestions. And for that amount of money you will have no problem finding something nice.

I stayed 5 nights in Lisbon last January, at Residencial Florescente, after having read great reviews online. I'm so glad I stayed there. Fantastic price, great location, very clean and quiet. Easy access to Rossio Station which is only a couple minutes walk from the hotel.
http://www.residencialflorescente.com/index.php?lg=en

The Sofitel Liberdade is closer to the center than the Marques de Pombal- perhaps a 10 minute walk to Rossio. We stayed there 4 days last month (Sept. 2011) and found it to be as excellent as all its Tripadvisor ratings. If you are able to reserve in advance, there are very good pricing deals at the Sofitel site (we prepaid over 2 weeks in advance and the Superior Room was 110 Euro). A metro site is absolutely right in front of the hotel, and though we walked most of the time, the metro was very handy upon occasion. We chose a street-view room (ask for a high floor to see above the trees along this attractive boulevarded street), but if you want quiet, you may prefer a room at the back. You'll love Lisbon wherever you stay.

I, too, highly recommend the Sofitel. Stayed there last year and would go back without hesitation.

Enjoy Lisbon! A most interesting place to visit.

I stayed also at Residencial Florescente, and love it. The location, the price, the room was nice, clean and the breakfast good.