Story totally grisly about Spain (8)
I believe the answer is:
allegory
'story' is the definition.
(allegory is a kind of story)
'totally grisly about spain' is the wordplay.
'totally' becomes 'all' (I've seen this in another clue).
'grisly' becomes 'gory' (I've seen this before).
'about' means one lot of letters go next to another.
'spain' becomes 'e' (abbreviation for Espana).
'gory' after 'e' is 'egory'.
'all'+'egory'='ALLEGORY'
(Other definitions for allegory that I've seen before include "Story revealing a hidden meaning" , "Story with symbolic characters" , "Metaphor; parable" , "literary device" , "Moral tale" .)