You say nothing about where you are starting from, however I think most people here agree that the best English-language starting point is J. H. Elliott's "Imperial Spain: 1469-1716" ISBN-13: 978-0141007038.

From there I recommend J. Lynch's "Spain Under the Habsburgs" ISBN-13: 978-0814750094. It goes through more detail about the relationship between different parties (the court, the royals, various regions) than Elliott's book, but it requires a decent background knowledge of the period.

The reign of Carlos II and early Bourbon Spain is actually relatively understudied compared to its Habsburg predecessors. John Lynch's Bourbon Spain, 1700-1808 is a good place to start. It's one of Wiley-Blackwell's "History of Spain" series which are to be detailed introductory survey histories. The Castilian Crisis of the Seventeenth Century: New Perspectives on the Economic and Social History of Seventeenth-Century Spain edited by I.A.A. Thompson is an anthology collecting some of the latest scholarship on Spain/Castile's "decline," largely focusing upon economic issues. Two interesting books about social outsiders in Spain and its empire are Barbaros: Spaniards and Their Savages in the Age of Enlightenment by David J. Weber and Ireland and the Spanish Empire, 1600-1815 by Óscar Recio Morales. Both monographs examine the attitudes of the state and society towards these minority groups and how the geopolitical and cultural contexts of the era shaped the experience of multi-ethnic Spain.

Thank you both for your helpful replies, I appreciate it!