After all your help, we are going to take your great advice and spend our last night in Spain in Nerja. Does anyone have any feedback on the following hotels/hostels?
They are in the range of 50-80 Euros a night,and look good on their websites.

Hotel Benjamar-on Avda. Castilla Perez
Hotel Chaparil-on Plaza Chaparil
Casa Mercedes-on Maria de Waard near
Burriana beach
Hotel Jose Cruz- Burriana beach

We leave in 3 weeks-can't wait!!

MUCHAS GRACIAS!

Hi, funjione,
I'm glad you are spending a night in Nerja. I have not stayed in any of these hotels but would recommend Casa Mercedes. It has the best location ( east side, not far from the town center) and it was once recommended to us when we were arriving a few days before our apartment rental.
Hotels Benjamar and Chaparil are on the west side which is not as pretty as the east side. Hotel Jose Cruz is a mile and a half from the town center.
If you want some restaurant recs I have them posted on Slowtrav in the Spain section.
Have a great trip!

Thanks Judi for your reply. I was not aware that there were 2 sectins of Nerja. I am awaiting response from Casa Mercedes but they have not written back after my 2 inquiries to them.

If you don't get a reply from Casa Mercedes then I suggest you go with Benjamar or Chaparil. You are only going to be there one night and you will be within walking distance to the Balcon (town center).

You can also explore the little streets in the old part of town on the east side. Be sure to walk out to the end of the Balcon in the late evening.

The west side has a very nice promanade along the beach.

Thanks again Judi. I have not yet heard from Casa Mercedes. If I do not hear by Sunday, I will reserve Hotel Bajamar, unless I get further input here. Thanks again !