Here’s my translation

Alan

"Þetta var lítið frægðarverk," svarar Þórólfur, "en gera mundi eg það vilja
„This was a little exploit (no great feat),“ answers Þórólfr, „but (and) I would want (vilja, verb) to do that

er þér þætti eigi betur."
which would-seem not to you better.” (ie I would like to give you a taste of your own medicine)

Þórólfur var málóði og heitaðist í hverju orði.
Þórólfr was using-violent-language and made-threats in each word.

Þórður átti heimanferð fyrir höndum. Ólafur sonur hans var þá sjö vetra eða
Þórðr had a journey-from-home in hands (ie to attend to). Ólafr his son was then seven winters (old) or

átta. Hann fór af bænum með leik sínum og gerði sér hús sem börnum er títt
eight. He journeyed from the-farmhouse with his game(I´m guessin this is the dative sg form of leikr) and built for himself a house as for children (dative) is usual (tíðr)

en Þórólfur kom þar að honum. Hann lagði sveininn í gegnum með spjóti. Síðan
but Þórólfr came there at him. He thrust through the-boy with a spear. After-that

fór hann heim og sagði konu sinni.
he journeyed home and told his wife.

Hún svarar: "Þetta er illt verk og ómannlegt. Mun þér þetta illu reifa."
She answers: “This is an ill deed and unmanly (inhuman).This will for you end (reifa, Z4) badly.”

En er hún tók á honum þungt þá fór hann í brott þaðan og létti eigi fyrr en
But (And) when she took him heavily (ie when she was mightily ill-pleased with him, cf taka á e-u, Z12) then he journeyed away from-there and stopped not before

hann kom á Miklabæ til Arnórs. Fréttust þeir tíðinda.
he came to Miklabær (Large-Farm) to Arnórr. They asked-each-other for tidings.

Þórólfur segir honum víg Ólafs: "Sé eg þar nú til trausts sem þér eruð sakir mágsemdar."
Þórólfr said to (told) him of Ólafr’s slaying. “I look now for support (sjá til trausts, Z6) there where you are (ie in your direction) for reasons of in-law-ship.”

"Eigi ferð þú sjáandi eftir um þenna hlut," sagði Arnór, "að eg muni virða
“You journey not looking along (ie you are obviously not looking where you´re going) concerning this thing,” said Arnórr, “(if you think ) that I will esteem

meira mágsemd við þig en virðing mína og sæmd, og ásjá áttu hér engrar von af mér."
more (my) in-law-ship with you than my (own) esteem and honour, and you-had (áttu = átt-þú) here of help no expectation from me.”

Fór Þórólfur upp eftir Hjaltadal til Hofs og fann þá Hjaltasonu og sagði
Þórólfr journeyed up along Hjaltadalr to Hof and met then (the) sons-of-Hjalti and said to (told)

þeim hvar komið var hans máli "og sé eg hér nú til ásjá sem þið eruð."
them where his case was (had) come to (reached) “and I look now for help here where you-two are (ie in your direction).”

Þórður svarar: "Slíkt eru níðingsverk og mun eg enga ásjá veita þér um þetta efni."
Þórðr answers: “Such are base-deeds and I will not grant help to you concerning this matter.”

Þorvaldur varð um fár. Fær Þórólfur ekki af þeim að sinni.
Þorvaldr became (was) cold (reserved) about (it). Þórólfr received nothing from them by way of support (sinni, Z3, but I see this translated as ‘at this time’ elsewhere?).

Reið hann í brott og upp eftir Hjaltadal til Reykja, fór þar í laug. En um
He rode away and up along Hjaltadalr to Reykir (Steams, Smokes), journeyed there to (the) hot-spring. But during

kveldið reið hann ofan aftur og undir virkið að Hofi og ræddist við einn
the-evening he rode down behind and under the-work (building) at Hof and conversed alone

saman svo sem annar maður væri fyrir og kveddi hann og frétti hver þar væri kominn.
together (ie spoke to himself) so that (ie as if) another person would-be in-front-of (him) and inquired who (hver not hvar) was (had) there come.

"Eg heiti Þórólfur," kvað hann.
“I am-called Þórólfr,” he declared.

"Hvert varstu farinn eða hvað er þér á höndum?" spyr launmaðurinn.
“Whither were you travelled or what is to you on (your) hands (ie what is your business)?” asks the-hidden (make-believe, imaginary)-man (person).

Þórólfur segir tilfelli þessi öll eftir því sem voru: "Bað eg Hjaltasonu
Þórólfr says these circumstances all according to (how they) were: “I bade (the) sons-of-Hjalti

ásjár," segir hann, "sakir nauðsynja minna."
for help,” he says, “for reasons of my needs.”