> Hann svarar: "Þá sátu tveir menn.

> He answers: "Then, two men sat. (Could this also mean
> "were sitting"?)

Yes; the Old Norse simple past and present often answer to
our past and present progressive.

> Þar eru þeir Ármóðssynir fóstbræður Þorgils, Halldór og
> Örnólfur, og ertu skilvís maður.

> They are the sons of Armod's, Thorgil's foster-brothers,
> Halldor and Ornolfur, and you are a trustworthy man.

> They were those Armod’s sons, Thorgils’ fosterbrothers,
> Halldor and Ornolf, and you are a trustworthy man.

> There are they (the) sons-of-Ármóðr, Þorgil’s
> foster-brother, Halldórr and Örnólfr, and you-are a
> trustworthy person (man).

I suspect that the sense of <skilvís> here is closer to
'dependable', one of the glosses for the modern word.

Brian