The first thing you need to do is contact the International Pensions Centre at Newcastle. You can find the phone number on their website or by searching on this forum. They will tell you what you can transfer to Spain on the S1 form (used to be the E106 and E121 for pensioners and disability allowances but is now all one form). With this form and your status completed (the pensions centre do it all for you) you can register on the Spanish NHS.
Yes, you do need to become a resident in Spain. Yes, you do have to pay 10% for the cost of your prescriptions up to a certain limit. No, you do not have to claim back the cost from all the regions in Spain. Some have a system whereby your pharmacy record is linked to your financial earnings and, once the cap is reached, no further charges are made. Some regions, though, still make you pay the full 10% and then expect you to claim back the excess. The maximum amount is current in Andalucia and our local pharmacist (Valencia region) told us this would be coming in during the next financial year.
To become a resident is quite easy if you have someone to help you (someone who speaks Spanish for a start). You now have to prove you will not be a burden on the country and have made provisions for your healthcare and have an income. If you are given the S1 then this covers the medical part. Your war pension and forces pension statements will cover the second part.
Best of luck.