Good work, Grace. As you can see, I had some difficulty with the verse
too, namely that sentence 'Fátt mun at fornu setri fríðs aldjötuns
hríðar'. Is the mountain described as "home of giant" or "home of
storm", and what does 'fátt mun' mean in the context? I don't know.

> er kennt er við þann Hallstein, er þrælana átti, þá er kallaðir váru
Hallsteinsþrælar

"which is named after Hallsteinn who owed the thralls who were called
Hallsteinn's Thralls" (`þá' here is the masculine accusative plural
demonstrative pronoun). According to Landnámabók, `Hallsteinn son
Þórólfs Mostrarskeggs nam Þorskafjörð og bjó á Hallsteinsnesi; [...]
Hallsteinn hafði herjað á Skotland og tók þar þræla þá, er hann hafði
út; þá sendi hann til saltgörðar í Svefneyjar; þar höfðu þeir
Hallsteins þræla hag fram' ("Hallsteinn, son of Þórólfr Mostrarskegg
laid claim to Þorskafjörðr and dwelt at Hallsteinsnes; [...]
Hallsteinn had been raiding in Scotland and captured there the thralls
that he brought out [to Iceland] with him; he sent them to make salt
in Svefneyjar; Hallsteinn's thralls profited by that").

> Þat bar til einn vetr, er [...]

"It [the following events] happened one winter, when [...]"

> drífu

"snowstorm" or "heavy fall of snow"

> Þykkir mér hættligt í náttmyrkri, at vér gangim fyrir hamra ofan."

"I think there is a danger that we might go over the cliffs in the dark."

> ok gengu undir hamar einn brattan, þann er engi var snór undir

"and went under a steep cliff, under which there was no snow" (`þann'
is masculine accusative plural demonstrative pronoun, agreeing with
`hamar'. `brattan', also masc.acc.sg., is the adjective meaning
"steep". `er' is the relative particle: `þann er' "which").

> Þeir hittu þar loksins hellimunna, þann er Þórðr vissi eigi ván til.

"Eventually [at last, finally, in the end] they found a cave-mouth
there which Þórðr hadn't expected."

> broddum stæltum

"steel spikes" (past participle of `stæla' "to steel, temper, harden
iron into steel"). Why more than one, I wonder.

> þat er hætt við villu
> dangerous with error

"there's a danger of mistaking one's way [straying from the path,
getting lost]"

> ok kann þat verða, ef menn hlaupa út um nætr, at þá sýnist annan veg
en er.
> and it can be if people run outside during thenight that then seems
another way than (actually) is." (you could run out and go the wrong way?)

More or less right, although I think `annan veg' is adverbial rather
than referring literally to the route: "it can happen, if people run
outside at night, that things look a different way [i.e. differently]
from how they [really] are." With the implication that this could
cause you to get lost.

> læti mikilfenglig innar í hellinum

"an incredible din deeper inside the cave" (`læti' "noise", neuter
nominative plural; `mikilfenglig' here is an intensifying adjective).

> ok varð þeim litit inn í myrkrit

A round-about, impersonal way of saying "and they looked in into the
darkness" (`litit' is the neuter past participle of `líta' "to look").

> Ekki annat heldr ætluðu þeir en þat væru augu tvau ok mundi sá ekki
mjóleitr, er þau skriðljós bar.

We could paraphrase it something like: "They thought they looked like
nothing so much as two eyes, and the creature who bore those lanterns
[as its eyes] would not have been slender-faced." (`ekki mjóleitr', an
understatement).

> Var þar hafit upp kvæði ok kveðinn tólf vísna flokkr, ok kvað sá
ávallt tysvar niðrlagit:

"Thereupon a verse was begun and a set of twelve strophes chanted, and
he always chanted the ending [of each strophe] twice." (`flokkr' means
generally a "crowd, band, party/faction, company", but here is a
technical term for a kind of poem distinguished from the more
prestigious `drápa' form by the lack of a refrain in the `flokkr').

> Hrynr af heiða Fenri
"There comes a clattering/crashing from the Fenrir of the heath."
(Fenrir heiða = Fenrir [wolf] of heaths = giant. So: "The giant
crashes about.")

> Höll taka björg at falla.
"Sloping cliffs begin to fall" (`höll', nominative neuter plural of
`hallr' "sloping, slanted", agreeing with `björg', plural of `bjarg'
"cliff").

> Fátt mun at fornu setri fríðs aldjötuns hríðar.
I'm not sure about this. `setr', neuter = "seat, home". Finnur
Jónsson identifies the kenning as `setr hríðar' "seat/home of
snowstorms [=mountains]", but I suppose `setr fríðs aldjötuns' "home
of the beautiful old giant" also makes a reasonable kenning for
"mountains". I don't know how to interpret the whole sentence:
"[There will be little??] of the beautiful giant at the ancient seat
of snowstorms."

> Gnýr þá er gengr hinn hári gramr um dökkva hamra.

"There is a din as the hoary chief walks dark cliffs."

> Hátt stígr höllum fæti Hallmundr í gný fjalla, Hallmundr í gný fjalla.

"High strides Hallmundr on slanting foot in the din of the mountains,
Hallmundr in the din of the mountains." (Is this related to the idiom
`standa höllum fæti' "to be in a weak position"?).