The Blue Division was also a repository for the most fanatical of the Phalangists - once I read that Franco deliberately sent them to Russia to die off because they were too extreme and would have alienated the rest of the population. It should be noted that even when he actually withdrew them from the front, a legion remained behind to continue the fight. It was also withdrawn eventually. However, the division aquitted itself well and frankly in game it should be rated as almost elite, but that's only my opinion.
Regarding Spanish neutrality, keep in mind that Franco was fascist by western definition - more of a hardened nationalist in reality. I mean, how can one actually reconcile the fact that he was a devout churchgoer with fascism which was essentially an atheist creed? Having said that, Spain was in the throes of reconstruction and was heavily dependent upon American money (he had quite some supporters across the Atlantic), oil and other stuff (including food). However, despite making impossible demands he also sugared the pill by giving the produce of Spanish mines to the Germans, especially wolfram, as long as he shared a border with Hitler and as long as he was seen as winning. in reality, he had no other option - with a divided and devastated homeland, he would have been barking mad to even venture into the war, aside from the fact that at the begining, he actually shared the border with the strongest military power in the Allied camp - France.
Germans provided their allies with a lot of captured equipment when it came to tanks and AT guns, but it was second rate at best. The other issue with captured equipment is that ammo is generally pretty limited and once you run out, there probably isn't a whole lot more depending on what you are talking about.
In fact I was wondering about this from a game perspective. If I'm not mistaken, the bulk of Finnish tanks were actually refurbished soviet tanks which were handed over. Also a lot of French weapons were handed over as well. In both cases, the Reich produced limited runs of ammo and in the French case, spare parts for these weapon systems. It is also interesting that they also kept Czech tank factories churning out their reliable designs which they exported quite extensively to Hungary and Rumania.