> Þeir Arnkell hljópu inn í dyrnar og sáu hvar Katla var og
> lék að hafri sínum og jafnaði topp hans og skegg og
> greiddi flóka hans.

> They, Arnkell (and his pals), burst (OK, Z." doesn't say
> "burst," but that's the idea) indoors and saw where Katla
> was and (she) played a trick to her billy-goat and evened
> out his bangs and beard and unraveled his tangle.

> They, Arnkell (and co.) ran inside in the doors and saw
> where Katla was and she was playing with her buck-goat and
> evened up his topknot and beard and combed his coat.

Arnkel and his companions ran in through the doorway and saw
where Katla was and played with her he-goat and trimmed his
forelock and beard and disentangled his matted hair.

> Þeir Arnkell gengu í stofu og sáu hvergi Odd.

> They, Arnkell (et al), went in the living room and nowhere
> saw Oddur.

> They, Arnkell (and co.), went into the room and saw Odd
> nowhere.

Arnkel and his companions went into the parlour and saw Odd
nowhere.

> Lá þar rokkur Kötlu í bekknum.
> Katla's spinning wheel lay there on the bench.
> Katla’s distaff lay there on the bench.

Katla’s distaff lay there on the bench.

> Þóttust þeir þá vita að Oddur mundi eigi þar hafa verið,
> gengu síðan út og fóru í brott.

> It seemed to them then reason that Oddur would not have
> been there, they then went out and went away.

> They thought then they knew that Odd would not have been
> there, (they) went out then and went away.

It then seemed to them that they knew that Odd must not have
been there; then [they] walked out and went away.

> En er þeir koma nær því sem fyrr hurfu þeir aftur þá mælti
> Arnkell: "Ætlið þér eigi að Oddur hafi verið í
> hafurslíkinu?"

> But when they came near that (place) which they previously
> turned back, then Arnkell said: "Didn't you thing that
> Oddur had been in the likeness of a goat?"

> But when they came near where they had previously turned
> back, then Arnkell spoke, “Don’t you think that Odd had
> been in the likeness of a goat?”

But when they come near the place where they (had) turned
back before, Arnkel said: ‘Do you not think that Odd was
[‘has been’] in the form of a goat?’

> "Eigi má vita," segir Þórarinn.
> "Can't know," says Thorarinn.
> “(One) can’t know,” says Thorarinn.

‘I cannot tell [‘know’],’ says Þórarin.

> "En ef vér hverfum nú aftur þá skulum vér hafa hendur á
> Kötlu."

> "But if we return now back then we should have (our) hands
> on Katla."

> But if we turn back now then we have (to be?) against?
> Katla.”

‘But if we turn back now, we’ll have (our) hands on Katla.’

> "Freista munum vér enn," segir Arnkell, "og vita hvað í
> gerist," og snúa enn aftur.

> "We will yet try," says Arnkell, "and know what happened,"
> and still turns back.

> “We will still try,” says Arnkell, “and know what is going
> on,” and (they) turn back again.

‘We will yet give it a try,’ says Arnkel, ‘and see what
happens,’ and (they) turn back again.

> En er sén var ferðin bað Katla Odd ganga með sér.

> And when the journey was seen, Katla asked Oddur to go
> with her.

> And when the journey was seen, Katla bade Odd go with her.

And when the journey was seen, Katla told Odd to go with
her.

> En er þau koma út gekk hún til öskuhaugs og bað Odd
> leggjast niður undir hauginn "og ver þar hvað sem í
> gerist."

> When they came out, she went to a trash dump and asked
> Oddur to lie down under the trash "and see there what
> turned out."

> And when they come outside she goes to an ash heap and
> bade Odd lie down under the heap “and stay there whatever
> happens.”

And when they came outside, she went to (the) ash-heap and
told Odd to lie down under the heap – ‘and stay [‘be’]
there, whatever happens.’

> En er þeir Arnkell komu á bæinn hljópu þeir inn og til
> stofu og sat Katla á palli og spann.

> When they, Arnkell (and the others), came to the farm,
> they burst in and (went) to the living room, and Katla sat
> on platform and spun.

> But when they, Arnkell (and co.), came to the farm they
> ran inside and to the room and Katla sat on a dais and
> spun.

And when Arnkel and his companions came to the farm, they
ran inside, and to the living room, and Katla sat on the
dais and spun.

> Hún heilsar þeim og kvað þá þykkfarið gera.

> She greets them and then said (they) make frequent visits.

> She greets them and mentioned then frequent visits
> happening.

She greets them and said that they make frequent visits.

It's an accusative + infinitive construction: <þá> is
'they'.

> Arnkell kvað það satt.
> Arnkell said that (was) true.
> Arnkell said it (to be) true.

Arnkel said that that (was) true.

> Förunautar hans tóku rokkinn og hjuggu í sundur.

> His companions took the spinning wheel and broke (it) in
> pieces.

> His comrades took the distaff and broke it apart.

His companions took the distaff and hewed it asunder.

> Þá mælti Katla: "Eigi er nú það heim að segja í kveld að
> þér hafið eigi erindi haft hingað í Holt er þér hjugguð
> rokkinn."

> Then Katla said: "That is not home (?) to say in the
> evening that you have not had an errand here in Holt when
> you broke the spinning wheel."

> Then Katla spoke, “Now it is not to say at home in the
> evening that you have had no errand hither in Holt when
> you broke the distaff.”

Then Katla said: ‘Now that is not to be said at home this
evening, that you have not had business hither at Holt, when
you cut the distaff.’

She's saying, I think, that they when they get home they
won't have to say that they'd accomplished nothing, since at
least they broke her distaff.

> Síðan gengu þeir Arnkell og leituðu Odds úti og inni og
> sáu ekki kvikt utan túngölt einn, er Katla átti, er lá
> undir haugnum og fóru brott eftir það.

> Then they, Arnkell (and his crew), went and searched for
> Oddur outside and inside and saw no living thing except
> one hayfield-boar, which lay under the trash, and (they)
> went away after that.

> Afterwards they, Arnkell (and co.), went and searched for
> Odd outside and in and saw no living thing outside of only
> a home-field boar, which Katla had, which lay under a heap
> and (they) went away after that.

Then Arnkel and his companions went and searched for Odd
outside and in and saw no living thing except one home-field
boar that Katla had, that lay under the heap, and [they]
went away after that.

> Og er þeir koma miðleiðis til Mávahlíðar kom Geirríður í
> móti þeim og verkamaður hennar með henni og spurði hversu
> þeim hefði farist.

> And when they came halfway to Mavahlidar, Geirrudur and
> here workman with here came to meet them and asked how
> they had done.

> And when they came half way to Mavahlid, Gerrid came
> towards them and her work man with her and asked how (it)
> had gone with them.

And when they come halfway to Mávahlíð, Geirríð comes
towards them, and her workman with her and asked how they
had fared.

> Þórarinn sagði henni.
> Thorarinn told her.
> Thorarinn told her.

Þórarin told her.

> Hún kvað þá hafa varleitað hans Odds "og vil eg enn að þér
> hverfið aftur og mun eg fara með yður og mun eigi mega með
> laufsegli að sigla þar sem Katla er."

> She then said (they) have insufficiently searched for him,
> Oddur, "and I still want that you return and I will go
> with you and will not be able to take things easily there
> as Katla is." (Z. laufsegl - sigla með laufsegli, to take
> things easy)

> She said then his to have (been) a half-hearted search for
> Odd “and I wish still that you turn back and I will go
> with you and will not be able to deal leniently with
> someone there (such?) as Katla is.”

She said that (they) have searched insufficiently for him,
Odd, – ‘and I still want you to turn back, and I will go
with you and will not be able to take things easy there
where Katla is.’

This is another accus. + infin. construction, with <þá> as
'they'. She appears to be saying that she'll have her work
cut out for her to keep up with Katla's tricks.

> Síðan snúa þeir aftur.
> They then turn back.
> Then they turn back.

Thereupon they turn back.

> Geirríður hafði blá skikkju yfir sér.
> Geirridur had a blue robe over her.
> Gerrid had a blue cloak over her.

Geirríð had a dark blue cloak over her.

> Og er ferð þeirra var sén úr Holti er Kötlu sagt að nú
> væru fjórtán menn saman og einn í litklæðum.

> And when their journey was seen from Holt, Katla is told
> that (there) now would be 14 men the same and one in
> colored clothes.

> And when their journey was seen (by folks) out of Holt,
> Katla is told that now (there) were fourteen men all
> together and one in coloured clothing.

And when their journeying was seen from Holt, Katla is told
that there were now fourteen people altogether, and one in
colored (dyed) clothes.

> Þá mælti Katla: "Mun Geirríður tröllið þar komin og mun þá
> eigi sjónhverfingum einum mega við koma."

> Then Katla said: "Geirrudur the giant will there (have)
> come and then no ocular delusion produced by spells can
> (be) employed."

> Then Katla spoke, “Gerrid the troll will (be) come there
> and then will eye deceiving alone not be able to work.”

My other two editions put a question mark after <komin>:

Then Katla said: ‘Might Geirríð the troll have come there?
Then [I] will not be able to use a mere optical delusion.’

For the version here:

Then Katla said: ‘Geirríð must [have] come there, and then
[I] will not be able to use a mere optical delusion.’

Brian