> Guðrún mælti: "Vel má Kjartan því allt gera djarflega það
> er honum líkar því að það er reynt að hann tekur enga þá
> ósæmd til að neinn þori að skjóta skafti að móti honum."

> Gudrun said: "Kjartan can well do all that boldly that
> which he likes because that is proven that he takes
> nothing then unhonored to that anyone date to shoot a
> shaft against him."

> Gudrun spoke, “Well may Kjartan do it all boldly when it
> pleases him because it is proven that he takes then no
> dishonor from that none dare shoot a shaft against him.”

> Guðrún spoke: “In that (respect) Kjartan may well to do
> completely boldly, that which pleases him because that is
> proven that he does (taka til e-t, dishes out) to no-one
> that dishonour (such) that any should-dare to shoot
> missiles against him.” (ie he can slag people off with
> impunity)

I think that <allt> goes with the following <það>: in this
he may boldly do all that which pleases him.

> Þeir Óspakur svara fá og heldur til áleitni við Kjartan
> sem jafnan var vant.

> They, Ospakr (and others), answer little to blame with
> Kjartan as equally was accustomed.

> They, Ospak (and company) made to answer and rather
> aggressively with Kjartan as was always custom.

> They Óspakr (and brothers) answer little (?) and (but)
> rather (just the same) in censure against Kjartan as
> always was expected.

'Little' seems fine to me: I take it to mean that they say
little other than their usual digs.

> Bolli lét sem ...
> Bolli made as if ...
> Bolli made as if ...
> Bolli acts like ...

Another past tense.

> Hann svarar: "Kona kom að mér óþekkileg og kippti mér á
> stokk fram.

> He answers: "An ugly woman came to me and pulled me
> forward to a log of wood.

> He answers, “A disagreeable woman came to me and pulled me
> from bed.

> He answers. “A woman came to me, repulsive (she was), and
> pulled me forward onto (the) board at the front of the
> bed. (stokkr, Z4)

I think that this is just another instance of the Old Norse
predilection for discontinuous word order: 'a repulsive
woman came to me' rather than 'a woman came to me, repulsive
[she was]'.

> Hún setti fyrir brjóst mér skálmina og reist á mér kviðinn
> allan og tók á brott innyflin og lét koma í staðinn hrís.

> She put the short sword against my chest and cut ...
> She set the short sword before my chest and slashed ...
> She places before my chest the-short-sword and slashes ...

<Setti> is past tense, as is <reist>.

> Þrifu þeir til hans ...
> They took hold of him ...
> They grabbed him ...
> They take-hold of him ...

Past tense again.

> Kjartan mælti: "Vera kann að yður þyki Án hrísmagi mjög
> merkimáll þá er hann situr á tali við yður um dagana er
> yður þykir allt sem vitran sé það er hann dreymir.

> Kjartan said: "It can be that you think An
> "brushwood-belly" very trustworthy when he sits in
> conversation with you during the day when you think all as
> wise be that which he dreams.

> Kjartan spoke, “(It) can be that to you seems An
> faggot-belly trustworthy then when he sits talking with
> you during the day when to you seems all to be as
> revelation what he dreams.

> Kjartan spoke: “(It) may be that (it) seems to you Án
> brushwood-belly very trustworthy when he sits in
> conversation with you during the-day (such) that that (it)
> should-seem to you completely as (it) should-be
> the-truth,l that which he dreams.

I'm with Grace on the translation of that last clause.

Brian