Hi Louise, a catch 22 huh! Here they say "la pescadilla que se come la cola" (literaly = "the hake that eats its tail") as you can picture it going around and around and around...
Well, there certainly is a lot of work in the IT field here in Madrid, I am surprised you have not found that perfect job.
If I were you I would do an "Intercambio" with a Spanish person. There are loads of Spaniards out there who are just dying to practice their English and an intercambio would be good for the both of you. In an intercambio you practice a bit of one language and then the other and help each other with your native tongue. For example, you would speak English for a while and then switch to Spanish, it is a give and take type of thing that has been going on since the age of time.
There are loads of intercambio ads in the monthly InMadrid Newspaper and in our (InMadrid and multimadrid) joint classifieds section at
www.multimadrid.com/classifieds and
www.in-madrid.com/classifieds 
You might want to check them out!
Another good place for intercambios is FOROCIO here in Madrid on the Carrera de San Jer�nimo. They have a website at
www.forocio.com .
Hey, that 2 and 1/2 months without working sounds pretty sweet to me, right up my alley
Speaking only Spanish and making contacts may be difficult, you may have to do a give and take thing like the intercambios I mentioned above.
Saludos y Suerte,
jer...