> Við þetta var lengt nafn hans ok kallaðr Freysgoði,
I'd say:
"By this his name was lengthened and
[he was] called Freyr's priest."
Or less literally:
"Because of this event he got a byname
and was called Freyr's priest."
lengja - lengdi - lengt = to lengthen, extend
Kveðja,
Haukur