Madrid has a lot of street prostitution, mostly North African women. Check out the Casa de Campo park...I believe you can take a cable car ride and get a view from the top, just to get your bearings. One used to be able to do that a couple of years back when I was there last.
Otherwise: high class escort services exist, but the prices are pretty steep compared to what you seem to pay in Toronto.
If in doubt, and you are lucky to get a taxi driver who speaks English, ask the taxi crowd. They are usually pretty clued in. Most "incall" places, though, look pretty dingy from the outside.
If you are mobile, i.e. have a car, you can go to one of the legal brothel places that are usually along the motorways. You cannot miss them, they are pretty large container like complexes with lots of neon lights in the middle of nowhere. PRices there are cheap (around EUR50 for a quicky, EUR 120 for h). Mainly Northern African or Eastern European gals.
If you're not too bothered, I'd suggest hitting the night clubs in Madrid ad trying to pick up some civilian Latins - they are usually up for a good party and some action, and all it'll cost you is some drinks (which are cheap and STRONG! A cuba libre usually is half glass rum, half glass coke, so you only need a couple, really).
Enjoy Spain, and if you want some normal tourist things to look at: Toledo is well worth a day trip.
Going to Madrid with a couple of buddies on tuesday, looking for a good time, any recommendations for places to go for hobbying?