It seems that your installation of
babel is messed up. The log indicates two different file versions.
At the beginning everything seems to be alright as the according line in the log shows.
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Babel <v3.8l> and hyphenation patterns for english, usenglishmax, dumylang,
nohyphenation, bulgarian, ukrainian, russian, spanish, galician, catalan, loaded.
But later on there are hints that an older package file is used.
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) (./babel.sty
Style option `babel' version babel-3.0c <15 july 1991>
English documentation dated <6 juni 1991>
)
! LaTeX Error: Unknown option `spanish' for package `babel'.
See the LaTeX manual or LaTeX Companion for explanation.
Type H <return> for immediate help.
...
l.4 \begin
{document}
The option `spanish' was not declared in package `babel', perhaps you
misspelled its name. Try typing <return> to proceed.
Another problem is that the file list in the log seems to be incomplete.
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*File List*
article.cls 2007/10/19 v1.4h Standard LaTeX document class
size10.clo 2007/10/19 v1.4h Standard LaTeX file (size option)
babel.sty
***********
There should be similar information in the third line as in the two above. The log file as a whole appears incomplete to me.
I suggest to check the version of the »babel.sty« file by taking a direct look with an editor of your choice. The package should identify itself with name and version number in the first lines of its code.
Best regards
Thorsten