HI pKNOTT,
NIE is the best start,you do not really exist in spain without one,using a friends address is fine,we always let clients use our shop address,according to the town hall there are about 56 people currently purchasing our shop with the view to moving in!
You can open an account with a passport and then change it a later date no problemo.
With the schools,most of the local schools will let you register and join mid term,midweek in fact mid day sometimes,i am not sure about the international schools as i have not had a great deal of experience with them.
To get your child into school you will need their padron,when you apply their padron will state education and health and yours will state health only.
To get your padron you will need deeds of the house if bought and rental agreement if renting,some Ayuntamiento's require a long term contract to issue a padron.
When you pick your padron up they usually tell you which school you should use (local),take the padron to the school and away you go.
When we arrived here we put our children into the shool on the following monday half way through the term,the school actually wanted them to start in the afternoon!!! school placement will depend on avaliability and area,my 4 yeard old actually goes school on the bus on her own,that would put the fear of god into a few mum's in the UK.
Hope this helps
Regards
Georgia