Right now, they have too many men in midfield and very little width. They are basically just getting in each others way. Xavi is also being played too high up the pitch, so he has less space to work in than normal.
They should drop one of Alonso and Busquets, play Xavi a little deeper and bring in a winger.
That would make the pitch bigger and make it far easier for them to move the ball around and find spaces higher up the pitch.
Only two of Alosno Xavi Fabregas ad Iniesta should be on the pitch at he same time, when Spain play more than this not only is it ineffective, it's boring and gay.