> Bolli stóð þá enn upp við selsvegginn og hélt að sér
> kyrtlinum að eigi hlypu út iðrin.

> Bolli then still stood up against the wall of the shed and
> held fast to him the shirt (so) that his intestines did
> not run out.

> Bolli still stood up then by the sheiling wall and held
> the kyrtle to himself (so) that (his) entrails would not
> fall out.

> Then (ie at that time) Bolli still was-standing up against
> the shieling’s-wall and held to himself with the-kirtle
> /wrapped the kirtle around himself?) (so) that
> the-entrails did-not-run (subj of hlaupa) out.

<Halda> 'to hold fast' takes a dative object, so I think
that Rob and Grace are right.

> Þá hljóp Steinþór Ólafsson að Bolla og hjó til hans með
> öxi á hálsinn við herðarnar og gekk þegar af höfuðið.

> Then Steinthor Olafsson attacked Bolli and struck at him
> with an axe to the neck by the shoulders and at once the
> head went off.

> Then Steinthor Olaf’s son attacked Bolli and hewed at him
> with an axe at the head by the shoulders and the head went
> off immediately.

> Then Steinþór Ólafr’s-son leapt at Bolli and hewed towards
> him with an axe on-to the-neck along the-shoulders and
> at-once the-head went off.

I'd translate <við> as 'by, at, close to' here.

> Þorgerður bað hann heilan njóta handa, kvað nú Guðrúnu
> mundu eiga að búa um rauða skör Bolla um hríð.

> Thorgerdur said hail to him have use for, stated Gudrun
> would now have to live around Bolli's red shoes a while.

> Thorgerd told him, blessed be (thy) hands, said now for
> Gudrun would be obliged to prepare Bolli’s bloody hair for
> a while.

> Þorgerðr bade him (be) blessed to enjoy the use of (his)
> hands (“good luck go with your hands”), declared now
> Guðrún would have to dress (see búa um, Z9) (the) red (ie
> bloody) hair (skör, Z4) of Bolli for a while.

I'm with Grace on the first bit: in effect she told him
'Well done!' See <heill> Z3.

> Hún hafði hnýtt um sig blæju og voru í mörk blá og tröf
> fyrir enda.

> She had tied about her a kerchief with blue stripes and
> fringes at the end. (Z. traf - fringe; hón hafði knýtt um
> sik blæju ok vóru í mörk blá ok tröf fyrir enda, a
> kerchief with blue marks or stripes and fringes at the
> ends

> She had knotted ?? about herself a fine colored cloth and
> was in a blue pattern and fringe on the ends.

> She had tied (I found hnýta in my MnI dictionary) about
> herself a fine-coloured-cloth (kerchief) and blue-black
> marks (ornamental figures) were in (it) and fringes at the
> ends.

CV mentions that <hnytja> is the modern form of ON <knytja>,
but unfortunately only in the entry for <knytja>, which
doesn't help one find it.

Brian