I am trying to plan travel logistics in southern Spain. Will take AVE train from Madrid to Seville. Then, possibly rent a car at Seville airport and drive visiting Ronda, Antequera and Granada. I would like to drop off the car in Granada or before arriving. How do I get back to Madrid? Is it better to take the train from Seville to Granada, then rent the car when leaving Granada and drop it in Seville to catch the train back to Madrid? Any ideas?

You can take the train back from Granada to Madrid. The RENFE website says this takes about 4.5hours.
The only reason to drive back to Seville is if you want to do a circular tour, but you if you do that depends on what else you wish to see and length of time you have.

You could get a cheap flight from Granada to Madrid...

We loved our railpass when we visited Andalucia. Madrid to Cordoba for a couple of days, Cordoba to Granada for a couple of days, Granada to Seville for a few days, Seville to Madrid two days, then overnight train to Barcelona.

We walked everywhere, even up the hill to the Alhambra (glorious place)!

Charity