If I am reading the definition of the Form I-797 correctly, it only means you are eligible for an extension (after your first 3 years, for a further 3 years).
Your present H-1B visa has expired.
But the consulates of Spain, Germany and Italy (based on the information found on their San Francisco consulate sites) require proof of a valid US resident visa with a minimum of three (3) months validity after returning from the Schengen Area.
Since you don't have a valid US resident visa at the time of the visa application, it is likely that they will refuse to accept the application.
So you either renew your H-1B visa before making the application or ask the Spanish consulate if an application is possible since you are planning to return to your home country after leaving the Schengen Area.
Receipt Notice: Form I-797, Notice of Action
This I-797 form is simply a receipt informing you that your application or petition has been approved. Note that this is just the receipt, not the official document. Therefore you cannot use this to travel, get a job, etc.
How Long an H-1B Worker Can Stay in the United States | Nolo
The H-1B visa is a nonimmigrant visa. That means it does not allow its holder to remain in the U.S. permanently, as an immigrant, but instead expires after a specified period of time. When one's H-1B status expires, the H-1B worker must either leave the United States, obtain an extension, or apply for a different status. If the worker simply stays in the U.S. past the expiration of the H-1B status, the worker loses legal status in the U.S. and can be removed (deported).
Spain, Consulate San Francisco - Schengen Tourist Visa Guidelines.pdf (PDF)
All non-US citizens who need a visa to enter the Schengen Area must have a US visa or a Permanent Residence Card with a minimum of three (3) months validity after returning from the Schengen Area.
Germany - Consulate San Francisco - Checklist: Schengen Visa Requirements (PDF)
Original of valid US alien registration card or valid US resident visa (type A, E, F plus endorsed I-20, G, H, I, J plus J1 document, L, O, R) and one copy
Italy - Consulate San Francisco - Schengen Tourist/Transit (PDF)
Proof of legal permanent residence in the United States (only non-U.S. citizens): U.S. Alien Registration Card or valid long-term U.S. visa, valid for at least three months beyond the intended departure from the Schengen member states.
