> "Veldurat sá er varar," segir Sigmundur.
>
> "Well-? he who warns," says Sigmund

In normalised ON spelling 'veldrat sá er varar'.

veldr: "is responsible" (3rd person indicative sg. of 'valda')
-at: an old fashioned negative suffix attached to verbs, but very rare
except in poetry. I imagine it was used here just because it's an old
proverb / set expression.

Thus, "He who warns is not responsible (for whatever evil may ensue
from not heeding the warning)."

> en mjög munt þú verða reyndur

"but you will be tested much (it will be a tough test for you; you
will be sorely tried; it won't be easy)"

> Og lögðu margir það til orðs og þóttust eigi vita hvað undir mundi búa

'lögðu', 3rd person past indicative plural of 'leggja': "Many people
talked about that and thought themselves not to know what lay behind
it / what was at the root of it." Or in more natural English just:
"...and didn't know what..." or "...couldn't think what..." Notice
that 'þóttust' is reflexive: they seemed to themselves not to know.

> og er alblóðugur allur
> and it is all (?) bloody over (i.e bleeding to death)

"bloody all over", "all/completely covered in blood". MM & HP
paraphrase "drenched in blood". 'allr' and 'alblóðugr' both masculine
to agree with 'hafrinn'. I think the prefix al- and the adjective
'allr' are saying the same thing really; I guess the doubling up adds
emphasis.