What happened to the nobility after the Conquest?

In a nutshell, by the middle of the 17th century we know that all old Mexica nobles had become commoners. Serge Gruzinski gives a detailed outline of this ‘decline of the aristrocracy’ in his book The Conquest of Mexico (1993: 64-67), where he writes:-
The ranks of the Indian nobility had been decimated by the wars of the conquest, distant expeditions, massacres and executions. When it survived and was able to negotiate changing sides after the humiliation of defeat, it had to learn to perpetuate itself in a hostile and unforeseen colonial milieu, which subjected indigenous customs to the law of the king and of God. First to be affected and to be condemned to obliteration were the children of mothers repudiated by the spouses whom the Church abjured to renounce polygamy. Women and bastards were brutally shorn of their rank that was their due... It is true that the Crown demonstrated concern to protect the status of the nobles, to grant them privileges, favours and goods. It did so as much through respect for the established order - whatever its origin - as because it could not do without these all too precious intermediaries on whom depended the collection of the tribute and the obedience of populations.

A ‘cacique’ from Tepetlaoztoc complains to ‘encomendero’ Miguel Díaz de Aux in the late 1520s about the latter’s brutal treatment of the local community; Kingsborough Codex, fol. 11b (detail)

In the first decades of the colony the Church was particularly concerned with educating the nobility. However, in the second half of the sixteenth century it tended to neglect all social disctinctions, partly because the stratification of indigenous society became blurred and the populations less numerous. At that time, nobles and plebeians often learned together to read and write, and the latter progressively gained access to important functions in the community, becoming alcaldes, regidores, escribanos [scribes] and even governors. Unqualified servants increasingly sought employment around convents, becoming sacristans, monastic cooks, singers and musicians. Cantors and musicians, organists, flautists, players of trumpet, pipe, sackbut and hurdy-gurdy even became so numerous that the Council of 1555 was alarmed... For the ranks of cantors and fiscales of the nobility were swelled relentlessly by newcomers happy to avoid paying tribute and to acquire a status that they would never have dared to claim before the conquest...

With time the Church ‘tended to neglect all social disctinctions, partly because the stratification of indigenous society became blurred and the populations less numerous...’