> hljópu upp á skip þeirra Vandils
> leapt aboard the ship of Vandil

Or literally "leapt/ran up onto the ship of Vandil and his brother /
and his men" -- see Alan's comments on Grace's translation.

> Í móti Gunnari gekk Vandill
> Vandil approached Gunnar

Yes, V. went towards or against G. as the case endings show.

> og sýndist hinum þrjú vera sverðin á lofti
> it appeared to that one (Vandil) that there were three swords on the

air

Yes, or I would say "in the air", or more in more literary style "aloft".

> Þeir sáu mann einn ganga
> hey saw a certain man walk down (do they specify one man on his own

here) from off the Headland

Good question. My first thought was to read it as just "a man", "some
(unspecified) man", "a certain man" = mann nökkurn, nökkurn mann --
though with the implication that he's alone since no one else is
mantioned -- and maybe also because he's telling dangerous secrets.
But then maybe it is "they saw a man walking *alone* down from the
headland". That's how MM & HP seem take it anyway, or at least they
include the word "alone". I'm not sure whether it's possible to rule
out either possibility, or if one is preferable, or if anything can be
deduced from the word order...?

> hverjir fyrir ráða.
> who commands them

Yes, with "them" understood.

> hidden (folgið- ? fela)

That's right. 4th conjugation strong verb, see Gordon section 130.
fela: fal, fálu, fólginn (folginn before c. 1200). In Proto-Norse,
the infinitive would have been *felhan (=Gothic 'filhan'), but the 'h'
was lost by Old Norse times. For the grisly details of how 'h' turned
into 'g' in the past participle, see Gordon section 71 "voicing".

> ella búist þér við sem skjótast.
> or prepare (make ready) to defend yourself.

"or else get ready as quickly as possible". búask við "get ready,
prepare oneself", with "for battle" or "to meet them (in battle)"
implied. 'sem' + a superlative adjective = "as ... as possible".