OK, this is how to make localization for your language work:
1) Copy the contents of the Data\Localization\English directory, and paste it to a new directory called Data\Localization\Spanish
2) Rename the relevant .xml files inside (english.xml -> spanish.xml, Gender\Female\english.xml -> Gender\Female\spanish.xml)
3) Change the contents of Data\Localization\language.lsx from this:
Code
                    <attribute id="MapKey" value="Language" type="22" />
                    <attribute id="Type" value="1" type="5" />
                    <attribute id="Value" value="English" type="20" />

... to this:
Code
                    <attribute id="MapKey" value="Language" type="22" />
                    <attribute id="Type" value="1" type="5" />
                    <attribute id="Value" value="[b]Spanish[/b]" type="20" />

4) Changing anything in your new spanish.xml should work now:
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