What kind of trip do you want? The answer to this question is just as important before you start buying plane tickets as it is once you've arrived in Amsterdam. The planning for a trip really depends on what you want to see, how long you have to travel, how you intend to get from place to place and ultimately what you can see.
The first questions you should ask yourself are; do I want to see as much of Europe as I can in "X" weeks? or, do I want to see as much of Germany as I can in "X" weeks? or, do I want to really get to know Madrid over the course of "X" weeks/days. How you answer this will determin what kind of planning you have to do.
Working backwards, if you plan on going to Madrid and only Madrid you will really only need to worry about purchasing a round trip plane ticket to and from Madrid. Rail passes won't be a concern for you (and really never should be for anybody just traveling in Spain. Point-to-point ticket prices are generally going to save you money in Spain over buying a rail pass). Booking flights to other countries or cities is not an issue and you really only need a travel guide book that has a lot of info about Madrid.
If you plan on spending all of your time in Germany but not in a specific city or town, your planning will start to be a bit more demanding. You will have the round-trip airfare of course but now you will also start thinking about how you are going to get from city to city. Will you rent a car or will you take a train? Will you be seeing several cities or just Berlin and Munich? If for example you will be only visiting Berlin and Munich then purchasing a point-to-point ticket on a train may be the cheapest way to go. If however you plan on flying into Berlin, traveling to Dresden then going to Leipzig to see your German cousin before you head south to Stuttgart where they are hosting a modern art exhibit and finally ending up in Munich, after stopping off in Tuebingen to drink at the student bar you spent your study-abroad experience in, a rail-pass will probably be a better idea. You're also going to have to book more hotels or hostels and carry a larger guide book that covers all of Germany.
Of course, it may be your first time traveling overseas and you want to get the biggest picture of Europe that you can and see as many countries as possible. Now you will be dealing with all of the above concerns on a larger scale. Rail-passes need to cover all the countries you want to see, you need to have some sort of idea of where you going so that you end up in the city your flying out of and your guide book should cover all of Europe.
Personally I found that starting with a tornado type trip that takes you all over Europe and finding what regions or countries appeal to you is the best idea for a first trip. Then the next time you go back you can concentrate on one of those countries, Germany for example, and see it in more depth. On your next trip overseas you may then want to spend more time in that one city (or surrounding area) that you really had a great time in and want to get to know better, Madrid for example. This system works well considering that the chances of having 5 weeks to travel all over Europe and the stamina to do it is probably going to come when you're younger. Then as the years go by and time off from work limits your trip length more and more your trips will become shorter and more focused and you won't have to put up with the strains of daily travel that older knees and bad backs can't handle.
Understandably, how long you have to travel will play a major role in how much you will get to see and needs to be taken into account when thinking about the above. In 2 weeks you will never be able to see and enjoy London, Paris, Madrid, Barcelona, Cinque Terre, Rome, Florence, Interlaken, Venice, Prague, Munich, Berlin and Amsterdam. A trip like that will take you 4-5 weeks and that is moving at a pretty quick pace. 2 weeks however would be enough time to travel to 3 or 4 interesting cities in Spain or Italy. Remember Europe is small in relation to the US. Germany for example is about the size of Michigan.
The best idea is to sit down with pen and paper in hand and ask your self: 1. What do I want to see? Then write these places down. Then ask yourself: 2. How much time do I have? Now, write next to each city how long you will need to be there to enjoy yourself and see all that you want (within reason). Guide books can help with this usually but when it comes down to it it is all pretty much common sense. A big city like Paris or Rome will generally take 3-4 days to get a grasp of what it has to offer (although on my last trip I ended up with 1 day to show my travel partner all the major sites in Rome and aside from missing the Pantheon by 30 min, we did it). A smaller city like Venice 2-3 days and a stop over in Rimini Italy 1-2 days. Without a doubt you may find that the beer prices in Budapest are just so good you stay for 5-6 days but you can cross that bridge when it comes down to it. Once you have listed all the time you would need for each country add it up and see if it is reasonable in your time-frame. Chances are that it is not, so now start crossing off the places that are either not quite as important this time around or way out of the way. Don't forget, you will have to account for travel time and if most of your list has you in Italy and southern Spain, crossing London off your list this time might be the best idea. Trust me, its not going anywhere and will be there when you come back next time.
Once you have a list of locations that will fit into your time frame cross out one more! You can always stick it back in later. Chances are that you will either like some location and stay longer than expected or the French rail workers will go on strike and you will not be able to get out of the Netherlands and into Paris for a day or two.
With this list in hand you can start to think about even more important things like what kind of Budget you have for beer, food, and housing...in that order.