> Þetta fréttir Ólafur faðir hans og aðrir frændur hans og
> verða fegnir mjög.

> His father and other relatives hear of this and rejoice
> greatly. (Z. feginn - verða f. to rejoice)

> His father, Olaf, learns this and others of his kinsmen
> and become very joyful.

> Ólafr, his father, gets-intelligence of this, and his
> other kinsmen and (they) become very glad.

For those who, like me, find such things fascinating,
<feginn> is cognate with (somewhat archaic) English <fain>.

> ... ganga þeir heim til búðanna.
> ... they go home to the (i.e., their) abodes.
> ... they go home to the booths.
> ... they walk home to the-booth (which they had earlier
> run out from).

<Buðanna> is gen. plural: 'to the-booths'.

> Hann hafði heyrt tal þeirra og tók undir þegar og kvað
> ekki saka.

> He had heard their talk and at once took hold (of it) and
> said it doesn't harm (anything).

> He had heard their discussion and took over at once and
> said no big deal.

> He had heard their conversation and undertook (it) )(got
> involved?, interceded? twigged, cottoned on?, taka undir,
> Z12?) at-once and declared (it) to harm nothing (ie it
> didn´t matter, “no big deal” I like).

I'd match it up with Z.'s <hann tók seinliga undir> 'he was
slow to answer': 'and immediately responded' or the like.

Brian