I've read some rather ill-informed comments about the character and nature of the Spanish Inquisition, so time to set the record straight!
Anyway, there has been a lot of interesting work on this subject. I would make particular mention of H. Kamen's Inquisition and Society in Spain, one of the defining modern texts.
I suppose it's impossible to shift a myth once it takes on an independent life, and most people's understanding of the Inquisition will forever be mediated by the wonderful Gothic excesses of stories like The Pit and the Pendulum. But did you know that in the early seventeenth century the Inquisition introduced such a demanding standard of proof in accusations of witchcraft that brought burning for this crime to an end in Catholic Spain more than a century before the Protestant north?
Yes, there were horrors attached to the Inquisition, particularly in the pursuit of religious uniformity in Spain; but the country did thereby avoid the equal and greater horrors that followed from the religious wars in France and Germany.
After the excesses of the initial campaign against the Conversos, the Inquisition was transformed bit by bit into an arbiter of public morals more than anything else, a little like the rule of the Major Generals in Cromwellian England. As Kamen says "For most of its existence the Inquisition was far from being the juggernaut of death." For example, approximately 100 people were executed as suspected Protestants in the brief campaign against Lutheranism between 1559 and 1562. Contrast this with the 127 priests executed in England between 1570 and 1603. Yes, Catholic Spain was intolerant, but not more so than the rest of Europe at the time.
The Inquisition in Spain also had a unique relationship to the state, answerable to the crown, not to the Pope in Rome. As such it operated a little like a modern secret police force, always alert to the possibility of dissent. Yet, as Charles Petrie points out in his 1963 biography of Phillip II, it was "a very mild affair compared with the NKVD and the Gestapo."
We all, I suppose, associate the Inquisition with the most gruesome forms of torture. But it employed no unique methods, nothing that was not already in widespread use. Torture, moreover, was only used in a minority of cases, and only for the most serious offences. A doctor was always present on these occasions, and the process was such that no lasting physical damage ensued. Ugly, yes, but a standard better than that set by other practitioners of the art, both then and since.