TOO MUCH PEDIGREE

That Carlos was the product of inbreeding is undeniable. Since the days of his ancestor Charles V (1500-1558, Carlos I of Spain), the Habsburgs had been in the habit of marrying members of the family's Spanish branch to members of the Austrian branch. Oh yeah, in their heyday [apogeo] the Habsburgs controlled not only the Spanish and Austrian Empires but also the low countries (Benelux), Portugal, southern Italy (Naples and Sicily), Milan and Burgundy.
Have a look at Carlos II's family tree. His mother and father were niece and uncle. Granted, this was sort of an accident of history given that this was Philip IV's second marriage, and it just so happened that none of the sons of his first wife, Elisabeth of Bourbon, lived long enough to accede to the throne.

A couple of other fun facts indicative of Carlos' pedigree collapse:

(1) Carlos was descended from his great great great grandparents Juana la Loca (1479-1555) and Philip the Handsome (1478-1506, Felipe el Hermoso) through three of their children.

(2) whereas someone whose ascendants (i.e. direct ancestors) were all unrelated to their spouses would have 32 great great great grandparents, Carlos only had 14.

Carlos' physical and mental deficiencies earned him the nickname "El Hechizado" (The Hexed). First off, there was his debilitating overbite. Prominent chins [mentón] ran in the Habsburg family (check out the portraits of Charles V or of Carlos' father Philip IV), but with Carlos II the condition was so bad that he had problems chewing. It's also said that it was difficult to understand Carlos when he spoke and that he frequently drooled [babeaba]. To me this seems analogous to those overly purebred Persian cats whose faces are so flat that they have respiratory problems and their tear ducts get blocked up.
This, however, was the least of Carlos' problems. He was feeble [débil] and sickly, prone to high fevers which kept him confined to his bed. It's also said that he suffered from seizures [ataques], that he invariably vomited on carriage rides due to chronic motion sickness, and that his eyes oozed [rezumaban] liquid in open air. In addition to his physical shortcomings, Carlos II was purportedly dim-witted [lerdo] and he was left basically uneducated. The classic 1911 Encyclopedia Britannica claims "there was no room in his nearly imbecile mind for more than childish superstition, insane pride of birth, and an interest in court etiquette." Due to his weak health, he remained mostly idle [ocioso] while his mother, his bastard brother Don Juan José of Austria, and his advisors made most of the decisions affecting the Empire, with Carlos' most vigorous activity consisting of the occasional hunt.
Although he was married twice Carlos II fathered no children, and it is assumed that he was infertile if not actually impotent. His reign as king was largely disastrous and his inability to produce an heir led to the War of Spanish Succession.