I may be wrong, but my memory is that the Bilbao albergue is out of town a bit, and that it's an "albergue juvenil" rather than a peregrinos albergue.
We stayed in a pension named Iturriena Ostatua. It's very nice, and right in the old quarter, Santa María Kalea 14, tel. 94 416 1500. It may have been about 50E for two, I can't remember. There are lots of much cheaper looking places throughout the casco antiguo, lots of signs hanging over the doorways.
It's about a 10 (?) minute walk to the Guggenheim from the casco antiguo, maybe a bit more, but it's a very pleasant walk. Or you can take the light rail tram that runs right next to the museum.