Here’s my translation. Suggestions highlighted. Questions underlined. Thanks, Brian, for corrections on last section. In a couple of instances, any distinction between your reading of the text and mine was too subtle for me to detect but thanks just the same.

Kveðja

Alan

Þessu játtaði Höskuldur og lætur binda fastmælum.
Höskuldr agreed to this and causes to bind (stitch up) a fast-engagement (firm-agreement).


Þetta líkaði Melkorku þungt, þótti fóstrið of lágt.
This pleased Melkorka heavily (ie it didn´t please her at all), (the) fostering seemed too lowly (not noble enough).


Höskuldur kvað hana eigi sjá kunna: "Er Þórður gamall maður og barnlaus og
Höskuldr declared her not to be able to understand (see, see sjá, Z4): “Þórðr is an old man and childless and

ætla eg Ólafi (note:  dative) allt fé eftir hans dag en þú mátt hitta hann ávallt er þú vilt."
I expect all (the) property (to go) to Ólafr after his day (ie when Þórðr dies) but (and, ie meanwhile)you can meet-with him (Ólafr) always when you want.”


Síðan tók Þórður við Ólafi sjö vetra gömlum og leggur við hann mikla ást.
After-that Þórðr received Ólafr, seven winters old, and places (bestows) on him great affection.

Þetta spyrja (present tense) þeir menn er mál áttu við Þórð godda og þótti nú fjárheimtan
Those men who had a case against Þórðr goddi learn-of this and (they) thought the-claim-for-money now

komin fastlegar en áður.
(to be) set more strongly (ie more difficult to obtain, see vera fastliga kominn, under fastliga) than before.


Höskuldur sendi Þórði gelli góðar gjafir og bað hann eigi styggjast við
Höskuldr sent Þórðr gelli good gifts and asked him not to be offended with

þetta, því að þeir máttu engi fé heimta af Þórði fyrir laga sakir, kvað
this (see styggjast við e-t), because they could recover no money from Þórðr for reasons of law (ie through legal means), declared

Vigdísi engar sakir hafa fundið Þórði þær er sannar væru og til brautgangs mættu metast
Vigdís (what syntactical role is Vigdís playing here?) to have found no reasons to blame Þórðr (see finda e-m e-t, Z7) those which were true and might be-reckoned for (ie justify her) away-going (departure)

"og var Þórður eigi að verr menntur þótt hann leitaði sér
”and Þórðr was not bred to a worse (degree) (ie he was no less a man) even though he tried for himself

nokkurs ráðs að koma þeim manni af sér er settur var á fé hans og svo var
a certain plan to take (rid, see koma + dat, Z3) that person from himself who was placed (ie imposed) on his means and also was

sökum horfinn (hverfa) sem hrísla eini (einir, what case is this?)."
surrounded (encased) with offences as (is) a sprig with (?) juniper.


En er þessi orð komu til Þórðar frá Höskuldi og þar með stórar fégjafir þá
But (And) when this word came to Þórðr (gelli) from Höskuldr and therewith (in addition) large gifts-of-money, then

sefaðist Þórður gellir og kvaðst það hyggja að það fé væri vel komið er
Þórðr gelli was-appeased and declared-for-himself to think that, that (the) money was wel-come when

Höskuldur varðveitti og tók við gjöfum og var þetta kyrrt síðan og um
Höskuldr kept (watch over things?) and accepted (the) gifts and this was quiet after-that and (but) among (them?)

nokkuru færra (comparitive of fá) en áður.
somewhat (?) cooler (see fá, Z2) than before.


Ólafur vex upp með Þórði godda og gerist mikill maður og sterkur. Svo var
Ólafr grew up with Þórð goddi and became a tall man and strong. Also was

hann vænn maður að eigi fékkst (fáast) hans jafningi. Þá er hann var tólf vetra
he a fair-to-behold man (person) and his equal.was not to-be-obtained (found). Then, when he was twelve winters

gamall reið hann til þings og þótti mönnum það mikið erindi úr öðrum sveitum
old he rode to (the) Thing and that seemed to people (men) a great errand (to travel) out-of other districts

að undrast hversu hann var ágætlega skapaður. Þar eftir hélt Ólafur sig að
to marvel at how excellently shaped he was. Thereafter, Ólafr comported himself in

vopnabúnaði og klæðum. Var hann því auðkenndur frá öllum mönnum.
armour and clothing. He was for that (reason) easily recognised from all persons (men).

Miklu var ráð Þórðar godda betra síðan Ólafur kom til hans. Höskuldur gaf honum
Far (see mikill, Z5) better was the authority (position) of Þórðr goddi after Ólafr came to him. Höskuldr gave him 

kenningarnafn og kallaði pá. (it´s a p not a þ) Það nafn festist við hann.
a surname and called (him) ‘peacock.’ That name became-fast (stuck) with him.


17. kafli - Dauði Hrapps
Chapter 17. Death of Hrappr.


Það er sagt frá Hrapp að hann gerðist úrigur viðureignar, veitti nú nábúum sínum
That is said about Hrappr that he became ill-tempered of intercourse (difficult to deal with), gave now to his neighbours

 svo mikinn ágang að þeir máttu varla halda hlut sínum fyrir honum.
such great annoyance that they could hardly hold their position because-of (due to) him (or in the face of his aggression?).

Hrappur gat ekki fang á Þórði fengið síðan Ólafur færðist á fætur. Hrappur
Hrappr was not able to (geta + pp) obtain a hold over Þórðr from-the-time-when Ólafr grew up (lifted himself up onto his feet). Hrappr

hafði skaplyndi hið sama en orkan þvarr (þverra) því að elli sótti á hendur honum svo
had the same temperament but the-power-for-work (strength) waned because old-age assailed him so that

að hann lagðist í rekkju af.
he took to his bed from (.it)