Here’s my translation

Alan

Þorkell svarar: "Tak sjálfur við þinn ef þú þykist ofgefið hafa eða
Þorkell answers: Receive (ie take back) yourself (what is) yours (?) if you bethink-yourself to have over-given (of-gefa, ie given too much) or

þér leiki afturmund að en eg mun ekki alnarkefli af honum höggva. Mun eg bæði
regret over (it) should-play-on you but I will not cut an ell’s-stick (alnar-kefli) from it (ie the timber, masc). I will both

til hafa atferð og eljun að afla mér annan við."
have-at-hand (possess, hafa til e-t) (the) execution and energy to procure for myself other timber (acc of viðr).”

Þá segir konungur og allstillilega: "Bæði er Þorkell að þú ert mikils verður
Then says (the) king and very-calmly: “(It) is both, Þorkell, that you are worthy of much (of great worth)

enda gerist þú nú allstór því að víst er það ofsi einum bóndasyni að keppast
and-yet you become now very-great (ie with the implication of being excessively so) because that is certainly overbearing (ie going too far) for one farmer’s-son to contend

við oss. En eigi er það satt að eg fyrirmuni þér viðarins ef þér verður
against us. But (And) that is not true that I should begrudge you the-timber if (it) becomes to you

auðið að gera þar kirkju af því að hún verður eigi svo mikil að þar muni of þitt allt inni liggja.
fated (ie it falls to your lot) to build there a church for that (reason) that it (ie the church) becomes not so large that all your conceit (of, Z3) will lie (be situated) inside.

En nær er það mínu hugboði að menn hafi litla nytsemd
But that is near to my fancy (expectation) that persons (men) should-have little use

viðar þessa og fari því firr að þú getir gert neitt mannvirki úr viðinum."
of this timber and (it) should-go further-off (ie it would-be by no mean, see fjarri, Z2) that you would-be-able-to build any great-work out-of the-timber.”

Eftir það skilja þeir ræðuna. Snýr konungur í brott og fannst það á að
After that they break-off the-conversation. (The) king turns (goes) away and that was-perceived that

honum þótti verr er Þorkell vildi að engu hafa það er hann lagði til. Lét konungur
(it) seemed to him (the king) worse that Þorkell would-take-no-notice of (see hafa at engu, Z14) that which he put to (him). (The) king caused

það þó ekki við veðri komast. Skildust þeir Þorkell með miklum kærleik.
that nevertheless to get abroad (ie to become public, to be exposed to the elements, see komas við veðri under komast, Z5). They, Þorkell (and the king) parted with great intimacy (on very friendly terms).

Stígur Þorkell á skipfjöl og lætur í haf. Þeim byrjaði vel og voru ekki
Þorkell steps onto (the) ship´s-plank (gangway, ie goes onboard) and puts out to sea. (It) blew well for them (ie they had favourable winds) and were not

lengi úti. Þorkell kom skipi sínu í Hrútafjörð. Hann reið brátt frá skipi og
out (at sea) long. Þorkell brings his ship into Hrútafjörðr. He rode at-once from the ship and

heim til Helgafells. Allir menn urðu honum fegnir. Hafði Þorkell fengið
home to Helgafell. All men became (were) glad (ie rejoiced) at him (ie his arrival). Þorkell had received (fá)

mikinn sóma í þessi ferð. Hann lét upp setja skip sitt og um búa og fékk
great honour in this journey. He caused to draw up (ashore) his ship and to fence (it) round (this expression listed at búa um, Z9) and got

kirkjuviðinn til varðveislu þar er vel var kominn því að eigi varð norðan fluttur
the-church-timber into keeping (custody) there where (it) was well brought (ie secure) because (it) became (was) not conveyed from-(the)-north

um haustið því að hann átti starfsamt jafnan. Þorkell situr nú heima
during the-autumn because he had always much-trouble (ie other matters to attend to). Þorkell sits (ie stays) now at-home

um veturinn í búi sínu. Hann hafði jóladrykkju að Helgafelli og
during the-winter in his farmstead. He had Yule-drinking (Chrissy-drinks) at Helgafell and

var þar fjöl- menni mikið. Og með öllu hafði hann mikla rausn þann vetur en Guðrún
a great crowd was (stayed) there. And on-the-whole he had great splendour that winter but (and) Guðrún

latti þess ekki og sagði til þess fé nýtt vera að menn mikluðu sig af og
did not hold-back (letja) from that and said (declared) money to be made-use-of (pp of nýta) for that (purpose), that people (men) increase themselves (ie their standing) from (it, money) and

það mundi og á framreitum er Guðrúnu skyldi til fá um alla stórmennsku. Þorkell
that would also (be) in (the) ‘fore-beds’ (on display) which (one) should procure for Guðrún concerning all munificence . Þorkell

miðlaði marga góða gripi þann vetur vinum sínum, er hann hafði út haft.
shared many good treasures that winter with his friends, which he had gained (hafa, Z8) abroad.