"It may be doubted whether so small a number of men ever employed so short a space of time with greater or more lasting effects upon the history of the world.” — Sir George Otto Trevelyan on the Battles of Trenton and Princeton
Yes, Spain keeps Lisbon. Only the Poruguese areas controlled by a power *allied* with Portugal would pass to French control. Note that the activation procedure specifies ...
Remove control markers from any keys of this minor where the control marker is from a major power that was eligible to activate this minor during this status check.
... and Spain is no longer an eligible power due to the DoW.
Historical note: after the death of King Sebastian, Phillip II forcefully prosecuted his claim to the Portuguese crown. He ruled in Portugal as Phillip I, and the two crowns were united under personal union for the next sixty years. Any Spanish player will do the same. ;-)