The location of this hostel is top-notch. It's right near Puerta del Sol and you can walk to practically everything. All of the major transportation hubs are around the area as well. For us, we took the Airport Express bus from Barajas to Plaza de Cibeles. From there it's about a 15 minute walk.
The hostel is actually on the second floor of a building, so at first glance the entrance looks pretty sketch. There was construction and renovations being done on the first floor when I arrived, so it was pretty gross, walking through crumbling bits of wall and dust.
The inside is rather kitschy and the decor is sort of comical. Greek statues and such in the main areas, every room has its own theme; ours was the Taj Mahal. Fair warning, the people who work at the hostel speak extremely limited English. Enough to get you settled into your room and explain the keys, but I wouldn't ask them for more than that.
The rooms are very very small, but they are well-appointed and they have a lot of nice little amenities, like a fridge and a kettle with tea and coffee packets. They even thoughtfully provided two bottles of water and a map of Madrid, which came in handy. Our stay was very satisfactory.
That being said, I probably wouldn't stay here again. It was okay for a couple of nights, but any longer, you really want to be somewhere more comfortable.