Thanks for that.
According to Aviation Disasters, ISBN 1 85260 602 9 the B727 was EC
-CFJ, which tried to take evasive action.
There was thick fog (Vis 300 M or less) which prevented the AVIACO crew from "obtaining sufficient visual reference in order to determine hat they were not taking the correct route to the beginning og runway 01. The weather was still above the minimum take off requirements however.
Pilot complaints of poor ground control and the absecnce of both marker lights and painted stop signs at taxiway/runway intersections had previously been lodged against Barajas Airport. Plans had actually been made for improvements that should have satisfied most of these concerns, but, tragically, the renovation programme was not to be budgeted until the year after the AVIACO/Iberia disaster".
I think that the last para says it all.