Thank you for the work you put into this answer.

   Album jacket: "As students of early California history will agree, the story has a strong factual basis."
   YT: "The incidents described in the Bowers/Guard lyrics are fabricated and non-historical".

I thought it was probly fiction. I grew up in California. I never heard of El Diego. He obviously wasn't ~San~ Diego! Nor of any Spanish treasure hidden on the coast. They plundered Inca, Maya, and Aztec gold but they shipped it across the ~Atlantic~, with various wrecks there and pirates involved.

In school we were taught that early California had no rich native civilization and it's not on any treasure route. The California Gold Rush didn't start until about the time the US Army took it away from Mexico, so Spanish gold in California before that, was probly limited to the governor's gold watch.

The tune is said to originate as "Si Me Quieres Escribir". I'm not sure about that yet. Just play the chords Am, G, F, E on your guitar and you get a Spanish sounding motif. Folk music borrows indiscriminately.