Ok so, next year when we visit Japan, we plan to climb Mt. Fuji. We thought it would be a wonderful way to relax afterword by visiting an outdoor hot spring / bath house. These are called Onsen if they get some or all of their water from natural springs.

A few things concern me. First, we have read that some of these smell very badly of sulfur (being derived from underground water.) Also some of these are very remote and as such you end up pay large amounts of money for just a few hours. Additional concern comes from the type of people that will be there.

Most of these places are nude bathing only (which is fine.) However, we are a bit concerned about some things we read about this. Generally this means that there is segregated bathing (women on one side, men on the other) which we would want to try to avoid so that our group can stay together. Also much information says that these places have become gatherings for "older crowds." We would like to stick with a location that is more popular with people around our age (the group will be from age 18 to 26.)

Does anyone have some tips for us or perhaps know of a location that fits our needs?

I just saw this post now after posting my other one.

As i said in that post, if you happen to stay in Fuji there is a Pubic Bath/Hot Spring establishment just beside K's House hostel.

Just to clarify some of your questions:
1) have read that some of these smell very badly of sulfur

Yes, although these are only 'true' hot springs. I travelled a decent amount around Japan at the time and we only encountered 'true' hot springs in the area of Beppu, which is the Oita prefecture of Kyushu Island. Beppu is known for it's natural hotsprings, which is why we went there. Any other Onsens or baths we visted were not 'natural' hotsprings so there was no Sulfur smell. It will most likely be the same with alot of places you will go to as well.

2) we would want to try to avoid so that our group can stay together. Also much information says that these places have become gatherings for "older crowds." We would like to stick with a location that is more popular with people around our age (the group will be from age 18 to 26.)

Unfortunetly not much you can do about that, there are only very few mixed Baths/Onsens/Hot Springs around Japan. And also not much you can do about the age thing. The crowd varied in Baths/Hotsprings we went too but usually you had age groups of all kinds in the same baths. The one in Fuji i mentioned was not very busy at all when we went (had the place to ourselves basically!). But yeah regarding these points not much you can do about it. Sorry

Thanks again for great advice! It seems we are just going to have to make some choices. I am glad to hear that most of these places don't have that nasty sulfur smell (don't think I could take that for more than a few minutes.) I will look up the place you mentioned and I will continue to do some more research as well. I will let you know what if I find anything interesting.