There is a great deal of out-of-date information about this particular section of the Levante.
I am in Villalazan right now, waiting for lunch, and I have the key to the Municipal in my pocket right now, and it is one of those very rare Free Albergues.
The current situation in Toro is that the Albergue that was run by the nuns was permanently closed years ago, as they grew too few and old to continue. The Pension Zamora which had a cheap beds for pilgrims scheme seems to have gone bust. And the Municipal has been in mere project phase since 2018.
The source of the the confusion here in Villalazan is that the lady who was running the private Pension that housed pilgrims more comfortably has retired, so that those seeking to reserve a place to sleep are out of luck, and should instead just walk in, grab a drink at the bar, enquire, and obtain the key to the Municipal. No reservations.
The Municipal is very much open.
I'll add that you can pay with your card at the bar-restaurant, so that not all mod cons have vanished from this place.