History
The reasons for the split as explained on Enciclopedia Libre are listed at Enciclopedia:Por qué estamos aquí y no en es.wikipedia.org (in Spanish, under GFDL). Key issues included concerns about censorship and the threat of advertising on Wikipedia.
Below is a translation of this page from Enciclopedia Libre:
The principal motive for the project's separation lies in our rejection of censorship, of an editorial line, and of including advertising.
Critical voices were censored and the opinions of editors with administrative power continually used personal wording.
The commercial venture Bomis, Inc., owner of the wikipedia.com domain name, announced the possibility of hosting advertisements on wikipedia's pages. Moreover, this idea struck us as unfortunate, as it implied the existence of a commercialization of the selfless work of volunteers to profit Bomis, Inc.
Bomis, Inc. was asked for explanations, and for a promise not to include advertising in the Spanish wikipedia.
They neither gave explanations nor made any sort of promise and, in addition, they maintained an arrogant attitude out of line with what we understand should be respect among people and cultures, given that it was based on a supposed superiority.
In the face of this attitude, we have preferred to abandon that project and begin another from scratch, basing it on the following platform:

This encyclopedia is protected under GFDL.
This encyclopedia will not host any advertising.
This encyclopedia will not be directed by editors who censor and impose an editorial line.
Culture should not be a commercial object.
Everybody has the right to access culture freely.
Having been born in a one society or another depends not on individual merit, but only on chance.
The chance of place and time of birth cannot serve as basis for any negative discrimination.
No culture is superior to any other. Reasons for the split
In October 2002, an effort led by Wikipedia editor Daniel Mayer (who goes by the username Maveric149) and others was made to reunite the projects, but the participants of Enciclopedia Libre voted against reunification before Wikipedia could offer a reunification proposal. The users of Enciclopedia Libre did, however, leave open the possibility for a future merger and expressed an interest in maintaining lines of communication. This episode also sparked a great deal of discussion about the role of the non-English speaking Wikipedias and has led to several changes and planned changes wanted by the non-English speaking Wikipedia communities.
Several talks have been made to make a merger. There also have been changes on Wikipedia and Enciclopedia Libre that may contribute to a merger:
Like Wikipedia, the Enciclopedia Libre uses the GNU Free Documentation Licence, so material can be freely copied between the two provided attribution is preserved. In October and November 2003, the Spanish Wikipedia used a wikipedian-designed bot to import articles from a dump of Enciclopedia Libre, but when the creator of this bot left Wikipedia due to a personal conflict, she took the bot with her.

Creation of a non-profit Wikipedia organization, known as Wikimedia Foundation;
Multilingual portal
Installation of Phase III software on Enciclopedia Libre Statistics
Other wiki encyclopedias:

Wikiweise (German)
WikiZnanie (Russian)
Susning.nu (Swedish)
Baidu Baike (Chinese)
Wikinfo (English)
Everything2