Yep, we're here and have been for 2 and a half years, although we are moving back to Bristol at the end of the month. Our DD was born here and we've both worked here.
Flat prices seem to be comparable to Bristol (in the UK) - certainly much, much cheaper than London. We pay 700/month for a 2 bedroom flat with lift in a quietish neighbourhood 40 minutes from the center by bus, but with lots of local facilities. Obviously the price will depend on your barrio - so Salamanca would be much more expensive, while Simancas even cheaper. Some of the newer barrios are very soul-less with few local shops - avoid.
Nobody here has much good to say about local schools - according to expat friends who have been here longer than us and work in education they are very didactic and quite behind the times in terms of teaching technique. But I guess it depends on which barrio you end up in. There are private schools, including ones where the language of instruction is English or French, if you can afford it. Otherwise Madrid is very good for kids - loads of parks and play areas, plus plenty of child-centred attractions - though I imagine being a parent of teenagers here would be quite unnerving, as youth clubs don't really exist, so they all hang out in parks and square after dark doing what teenagers do.
If you've got any more specific questions feel free to message me or post here and I'll try to answer them.