Well, why wouldn't he be the favourite to win in Madrid? Djokovic and himself have won it once, even though he has never liked the conditions. You can make an argument for Djokovic being superior on clay atm but it's certainly not clear-cut.
I agree, absolutely nothing is clear-cut atm, especially in Madrid. Nadal doesn't like the altitude, and the court has irritated him in the past. He was also away from the game a long time and isn't playing with much confidence yet. Djokovic looked subbar in Indian Wells and Miami, but was peak in the MC final. He also beat Nadal in straights here and played an incredibly tight three setter with Nadal before peak Djokovic had emerged. Federer has played well here in years past, but he too looked lousy earlier this year and has also been out for a while, if considerably less than Nadal.
Based on all that, I give Djokovic a solid edge on clay right now, especially here, but that could change somewhat depending on what happens in Madrid. And Federer could surprise people and come back fresh here. He could win the thing or he could go out early, there's really no knowing unless you're actually in his camp. It won't change his dark horse status in the other clay events however.
So the furthest I'd be willing to go is say there's no clear favorite in Madrid, but I don't really believe that. Djokovic remains my favorite unless his motivation goes AWOL again.