Stayed here for five nights with my family, and really enjoyed the location of this hostel; the beautiful building and decor, and the friendly staff.
The common rooms were inviting and the kitchen (with fridge, micro and oven for the guests to use) was well run and clean.
Madrid is a very walkable city and so in under twenty minutes you have the big art museums, El Retiro park, and in ten minutes there are lots and lots of cool and cosy bars and cafes and independent stores in Malasaña. The royal palace and Gran Via is just a five minute walk away.
Only negative thing was that me and my husbands mattresses were worn out, so it felt a bit like sleeping a hammock. (Not great for the back). Still I would not hesitate to return to this hostel, since everything else was comfortable, easy and inviting.