1) Do I need a NIE card in order to work and open a bank account?
Nie is need in spain , its like you uk tax Tax Number
back account can be opened with passport
2) Do I need a permanent address before I can obtain a Residence certificate? yes
3) I plan to stay in a hostel for 3 weeks (in Barcelona) on arrival, if I find work straight away can I start legally without having a NIE number and a Residency certificate. yes you can start work with out it as your an EU Citizen with your paper work
4) If I need these documents before I can legally work will I have to wait weeks for them to be processed without a new income coming in? many have to wait few days two weeks for your paper work