State will deliver our official position, and will be told the Saudis' official position on whatever is the subject of the day. She can deliver and hear what can't be delivered officially.
What is said, delivered, received, may not be political strictly speaking. It may be very personal. Even to the degree that its political, its personal if she's the go-between.
I am sure that US Embassy personnel are on the ground with Michelle to act as liaison with Spanish officials. Could she still have private meetings with anyone she wants? Yes, she could, but the Secret Service would be aware of any meetings.