I seem to recall a few years ago that the socialists decided to make everyone register their mobile phones under threats of being cut off.
My question is actually not related to that but this:

If a foreigner came to Spain for a short period for travel and wanted to purchase a SIM card for use in Spain making local calls or receiving calls would there be any problem? In other words the address of the SIM card purchaser would be abroad.

All they will need is the money for the sim and their passport to register the sim.

I have just changed from Movistar PAYG sim (registered as required) to YOIGO PAYG sim. I needed my Passport 15€ and my address. They could not find the steet name on which our casa is located so the put us under community across the fairway and then filled in the detail of our address which the computor accepted. So if the shop assistance is being helpful I think it should be possible. By the way our house and street are visible on the casdastral website, my satnav accepts the street name and post code and brings me right to the door. So why in gods name a high tech company cannot update their systems beats me. If I was making naughties in my cellar they would not know where I was and I thought that was the whole purpose of this registration malarky!