I stayed at the YOHO hostel (www.yoho.at), which was pretty nice and well located. Got to meet some interesting people in the bar and they have great pizza!
Be sure to ask somebody where "Mozart's garden" is. I don't remember its name, but it's a small garden where Mozart supposedly composed most of his "Magic Flute" piece. It's nice and... it'll give you a really nice panoramic view of Salzburg.
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