As far as I saw, Spanish at sea were quite unnefective (sorry Cachalote, hehe), I think they might have prevailed by sheer numbers, and by having the greatest sea merchant navy of these times. I heard they had the ol' Roman mind of fighting by abboarding other ships, or just plainly carrying troops to land them on land, while the British preferred to fight by gunning (at least at the fight with the Armada, these were the different strategies).
I am mainly in agreement with you, Playmofire, but however, I do not think religious inner war was the only reason by which England avoided entering in war with Spain. Spain had by these times a land army which was considered as "invincible" on continental wars (of course, they faced defeats, but all in all, did not lost major battles until the battle of Rocroi in 1643, according to Wikipedia), and they wanted to land it on England. They had also a population greater than that of England (later the English population doubled and Spanish reduced to the half, following economic crises), as well the naval hegemony. We have to remember that Spain also had the support of the other countries of the Holy Roman Empire (by being part of it), which made this latter the strongest state on Europe. Indeed, Spain (or the Holy Roman Empire) was the European potence of the times, I do not think any country can be much interested in declaring overt war on them at that time.
I am not trying to be "Hispano-nationalistic" in this: I acknowledge England (as Britain) later become the greatest power on the seas. But not in the XVI century, in spite of the accomplishments of its corsairs, at least according to Wikipedia.