That is exactly what they should have done. Congratulations.
For the benefit of anyone else who reads this thread: Santander is not a junk debt buyer. They are a subprime auto lender and frequently buy out entire portfolios of other smaller lenders who are seeking to get out of the auto credit business. My guess is that your old account was treated as though it was still active and once you brought it to their attention that this was a mistake they did the correct thing and dropped it. Make no mistake you do not ever want to do business with them (as in if this is your only financing option take the bus or walk) but they are an original creditor and the FDCPA would not apply to them.
Thanks to everyone who gave their input and advice. Just in case anyone here wants to know what happened. Taking the advice of many here, I sent an FOAD letter to Santander pretty much stating that they were in violation of a few laws and that I know the debt they were trying to collect from me was time barred. They sent back a nice reply. Their reply pretty much stated that they were in error and neither them or their client will be perusing this debt any further. They said that they consider this matter settled.
I'm not sure if they knew based on my letter that they did not follow the law by not including pertinent information as required in their first communication to me, or they just took me at my word when I told them I knew this debt was time barred and I refuse to pay anything. Either way, I'm glad to just put this all behind me. Thanks again everyone. I hope this helps someone else out there with Santander.