Hi,
Olhos de Agua is a lovely, laid-back little place and easily reached along the E125 road from the airport.
The weather should still be good in September with temps in the mid 70's (at least I hope so as we'll be just down the road in Lagos) although it may turn a bit chilly in the evenings especially if the wind is off the ocean, so you'd be best to pack trousers and long sleeves just in case.
You'll be pretty much central where you're staying and ideally placed for visiting all of the Algarve as you're hiring a car. I would suggest you visit the western Algarve - Lagos, Sagres and Cap St. Vincent for breathtaking scenery; Silves for a bit of history and the Monchique mountains for some unspoilt countryside.
Hope this has whetted your appetite for the Algarve - just shout if there's anything else you'd like to know.