Rich, it looks like you and I have been looking at some of the same information. Yes, Dylan played harmonica on Hester's self-titled album in 1962. The album notes identify the song only as "a Spanish song," but I think it's probably Ladino.
I also found mention of the Frankel and Jan Harmon albums. The search continues.

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LOS BILBILICOS (note: corrected lyrics below are probably more accurate)

Los Bilbilicos cantan consos piros de amor
Los Bilbilicos cantan consos piros de amor
Mi ne shama ma s'es cure se su friendo del amor
Mi ne shama ma y mi ventura esta en tu poder.

(tune: same as Richard Fariña's "Swallow Song")
Also known as "Los Bibilicos."
source: the Jewish Fake Book, Tara Publications.

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Different lyrics were recorded by Carolyn Hester on her self-titled album in 1962 (Fariña was married to Hester, and later to Mimi Baez). I'm looking for the lyrics Hester sang, and for background information and a translation.

The lyrics Hester sang sound kind of like:

Los Bilbilicos cantan in los arbos de la flor…

(and I can't make out the rest at all. As far as I can tell from the Hester lyrics, the only similarity with the song above is the tune and the first three words. Even then, there's a difference – Hester calls it "Los Bibilicos," with the "L" missing in the first syllable).

-Joe Offer-