Madrid (pronounced "MAH-drid", emphasis first syllable, as opposed to how it's pronounced in Spain) had been a thriving mining community during the first half of the 20th century, fell into a state of neglect after the mining business pulled out, and was gradually transformed into a progressive, artsy, eccentric (and again thriving) community from the 1970s onward - Madrid now abounds with first-rate art galleries and crafts shops, generally offering wonderful items at far lower prices than in nearby Santa Fe. For a tiny town, Madrid has an active and vibrant GLBT community, with the community's festive and funky Mine Shaft Tavern serving as an unofficial social (and culinary) hub.
This small village in North-Central New Mexico along the Turquoise Trail (Hwy. 14), a scenic byway that connects Santa Fe and Albuquerque. It's a slower but more enjoyable alternate route to I-25. By interstate, the drive takes about an hour, while it takes about an hour and 45 minutes, not including stops, if you take the Turquoise Trail - here's a map of the route. Madrid is 25 miles or 40 minutes' drive south of Santa Fe, and 45 miles or 60 minutes' drive north of Albuquerque).
Madrid doesn't have much in the way of accommodations, but you will find a few gay-friendly B&Bs right in the center of things. Of course, the town also makes for an excellent day trip from Santa Fe and Albuquerque, which both abound with gay-friendly hotels and B&Bs.