My partner and I have just returned from staying at the Hotel Palazzuolo on a walking holiday in May 2012. During our visit the hotel was mainly used by British, German and Swedish tourists on walking, painting, and cycling holidays. As others have remarked, the hotel is situated only ten minutes walk from the lovely old town of San Quirico. It is also only 5 minutes walk from the local Co-op where you can buy a wide range of food and drink for picnics and snacks. The hotel itself is very good. It is clean, well run, and the staff are cheerful and very helpful indeed. In general, the food was plentiful and perfectly acceptable (although some guests had a different view occasionally). The hotel is situated on the edge of the countryside and has lovely views from some areas. In particular, there is a beautiful view from the Dining Room balcony as the sun sets over Montalcino. Our beds were comfortable, and the shower was wonderfully hot after a hard day of walking, although our room was rather small and tired. Some guests were disturbed by barking dogs at times, but then you can't prevent that in a rural community. Overall, this is a thoroughly good little hotel which is run by the Simonelli family (who make the local wine) in a relaxed but efficient way. It's a budget hotel, and hence you get what you pay for, but it's sound and reliable.
You might be less troubled by barking dogs if you ask for a room overlooking the swimming pool.
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This review is the subjective opinion of a TripAdvisor member and not of TripAdvisor LLC.