Ignoring the specifics of when or why would Spain join the axis (there has been enough of a discussion regarding the topic already), I'll just assume it does and then Spain takes over Gibraltar. Assuming Portugal remains completely neutral (leasing bases in the Azores to the allies like IOTL might be too dangerous with German troops across the border), then the Allied stragy regarding Spain and its possessions would consist on sporadic attacks aimed at capturing or nullifying strategic assets for the Germans, mostly the naval and air bases in the Canary Islands which would be a shot in the arm for Germany's submarine campaign, leaving most of the Eastern Atlantic in Axis hands (the closest relevant allied base, with Gibraltar captured, would be Freetown, SL). The British and the Americans would consider attacking the Canary Islands in order to ease supply routes to the UK. Given the mountainous, almost labyrinthic nature of the archipelago, an attack would likely result in high casualties for the Allies should they attempt to expand their perimeter beyond the occupied ports, which they would have to do in order to subjugate the remnants of the Spanish garrisons hidden in the island's interior, either that or leave them to wither. Then the next logical step would be an attack on North Africa. Guess the best landing point for the WAllies would be to land in French Morocco, as the Spanish positions in Morocco are either difficult to attack, heavily defended, or too far away to be relevant. I guess the French reaction to the Allied attack would not differ much from OTL, this, assuming Germany does not hand over French Morocco to the Spaniards (which could cause an uprising in the already barely-controlled Atlas). Anyhow, northern Morocco is going to be a tough nut to crack, as it would host the best unit in the Spanish Army (The Army of Africa and the Legion) and has geography on its side.
Then comes the question of Europe. With Spain on the war the dynamic between the US and Britain changes, without the Mediterranean the British-favoured periferic strategy would be unrealisable, and I guess the Americans would have more of an argument to push for a 1943 version of the D-Day landings Those would happen either in Normandy or Calais, most other points in the Atlantic coast are no-goes (land in the Netherlands and you might find yourself bogged down, land in Brittany and you have to fight across a narrow peninsula). Aquitaine could be considered an option, but it is too far away from Allied bases for it to be the main point of attack.
The Brits would likely continue to push for an attack across the Mediterranean and the liberation of Gibraltar, and that recquires a landing in southern Spain. Luckily, the area from Cádiz to Huelva is one of the very scarce areas of coastal plains in Spain, and the only major plain in the Atlantic Coast, which also contains a handful of beaches such as that of Mazagón, close to the harbour of Palos de la Frontera (the same which saw Columbus leave for the Americas). From there there are no major difficulties in a push through the Guadalquivir river into Seville and due east to liberate Gibraltar, but past that point the terrain becomes mountainous and the already lackluster Spanish infrastructure almost dissappears, so I don't see the Allies attempting to push further than that, at least initially.