Well, I was gonna use this request as an opportunity to shamelessly plug my own Granada AAR, but Backpack beat me to the punch.
The first war that you fight with Castile decides an awful lot. I won it on my first try in my AAR game, but the difficulty was only Hard / Aggressive. Still, it was a very near thing. My advice is to try to fight a VERY defensive war. Let Castile and her friends besiege Gibraltar all they want: it's just a rock. Protect your capital at all costs and force the enemy to dislodge you from the mountains. With a little bit of luck, you'll still win battles despite being severely outmatched, thanks to the mountain defense bonus. Keep building troops constantly, taking out loans if necessary. You'll be amazed how many Castilians will gladly die at your feet.
You should by no means settle for a white peace with Castile. Try to get any allies out of the war, paying them a few ducats if necessary. Once you're fighting Castile alone, stay on the defensive until you feel you can successfully counter-attack. Then do it. Try to attack the Castilian army while it is in Andalusia, so that you
avoid the mountain defense bonus that just saved your hide. Eventually, you will destroy Castile's main army and all she'll have left are new troops constructed in the north that she dribbles southward. You should be able to slay these while besieging their provinces.
DO NOT SETTLE FOR PEACE WITH CASTILE WITHOUT GETTING AT LEAST TWO PROVINCES. If you do, you might as well start a new game and try again, because Castile and her friends will only DoW you again in five years, and you're right back to where you started. I recommend you try for Toledo and Andalusia. Andalusia has a large population base and produces wine. Also, it's Muslim, so no wrong-religion penalty. Toledo is literally a gold mine. Once you own Toledo, Castile's abilty to make war against you will be severely hindered. The reason why taking two provinces is so important is that it will make the other Iberian nations think twice about DoW'ing you. Of course, if you can manage to take more than two, go ahead. Just try to make sure they are Granadan shield provinces so you don't pick up any BB.
That should get you through the first war. Again, you'll need a little luck. But you'll find that the game totally changes once you win that first war and take territory from Castile. In my AAR game, the continued existence of Granada has forced the other Iberian nations to pursue some wild strategies. Castile took over most of Eire and Portugal vassalized Brittany.
The Andalusia CoT is irrelevant. By that point of the game you should already have destroyed Portugal and taken Tago, which gets the trade income from most of where Andalusia does anyway. If it does appear, well, then you've got two.
Unless you've edited Spain's event file like I have, I strongly suggest you destroy Castile / Spain before 1490. If you do not, the Expulsion of the Moors event will change two (or maybe four) of your provinces to Catholic.
