Here’s my translation

Alan

Eitt kvöld rekr hann fé langt fram á dalinn ok sezt niðr þar, sem hættir rekstrinum.
One evening he drives (the) sheep a long-distance forward into the-dale and sits-himself down there, where (he) leaves-off (hætta, same use of verb as given earlier ie ‘hætt þessari leit’) the-driving (of the sheep) (rekstr, Z1).

Sækir hann svefn mjök. Kemr honum í hug, at þetta mun trauðliga sjálfrátt, stendr upp aftr ok hristir þetta af sér.
Sleep(iness) overcomes (soekja, Z6) him greatly (but he doesn´t actually fall asleep). It comes to him in mind (ie it occurs to him), that this will (ie must) (be) hardly his-own-doing, (he) stands back up and shakes this (ie the sleepiness) off himself.

En sem hann litast um, sér hann, hvar fét kemr aftr hlaupandi með ysi ok þysi miklum. Rennr nú nokkut af Hrana ómegin,
But (And) as he looks about himself, he sees, where the-sheep come back running with noise and great uproar. A swoon (úmegin) now runs somewhat from Hrani,

ok nú getr hann at líta, hvar einhver óvættr hleypr eftir fénu. Nálgast nú þetta skjótt.
and now gets to see, where some evil spirit (or monster) runs after the-sheep. (She, ie the evil spirit) now approaches these (sheep, note grammatically sg) quickly.

Er þat at sjá tröllskessa ferlig. Stígr hún á í fyrir, en þjóhnappar berir.
That is to see (ie there was to be seen) a hideous troll-giantess. She steps on in front ( I can´t make sense of this, does she step in front of the sheep, or is it a description of the appearance of her front half?), but (her) buttocks (are) bare (naked).

Ok er hún kemr þar, sem Hrani var, staldrar hún við ok mælti: "Heill þú, Hrani hringr, ok muntu bíða mín."
And when she comes there, where Hrani was, she stalled (there-)with and spoke: “You (be) hale (ie Greetings!), Hrani ‘Ring’, and you-will wait for me.”

Hringr mælti: "Svo er víst, eða hvat heitir þú, eða hvar eru hýbýli þín?"
‘Ring’ spoke: “Such is certain (ie that´s true), but what are you called, and where is your home (note: grammatically plural)?”

Hún segir: "At litlu kemr þér þat at vita. Ek heiti Nípa, ok erum vit systr þrjár ok vinnum fyrir föður okkar í kör.
She says: “After a little (time) (it) comes to you (dative) to know that. (ie you will find out soon enough). I am-called Nípa, and we are three sisters and do-work for our father in bed.

Er ek þeirra elzt, en móðir okkar er dauð. Atsetr eigum vit í Fljótsdal hér fram. Höfum vit verit þar tólf ár,
I am the eldest of them, but our mother is dead. We have residence in Fljótsdale (River/Lake-Dale) here-forward. We have been there twelve years,

ok mun mönnum víða nálægt hafa þótt sik vanta á haustum fé ok hross.
and (it) will have (been) near-lying (obvious, evident? nálægr) to folks far-and-wide even-though for them (it) was-lacking (ie the were losing) sheep and horses in autumn.

Hefi ek nú sótt tvo smalamenn Helga króks, ok nú ætla ek at bæta þér við ok hafa til snæðu á morgun.
I have now taken two shepherds of Helgi ‘hook’, and I now intend to reward (ironic?) you there-with and to have (you) for a meal tomorrow.

Hefir þó föður minn illa dreymt til þín, ok held ek öfugt orðit fyrir honum um drauma, þar hann á nú fáar vikur eftir ólifat."
My father has still dreamt badly (ie had nightmares) about you, and I keep the-harsh-speech before him (?) concerning (the) dreams, there (where) he has now few weeks left alive (úlifat).”

At því mæltu ræðr hún á Hrana, en hann nær hryggspennu yfir um hana undir höndum.
With that spoken (?) she speaks to Hrani, but he obtains a back-hold over around her under (the) arms.

Þrýsti hún þá svo fast at handleggjum hans ok búk öllum, ok varð hann nær aflvana fyrir henni.
She thrusts then so hard at his arms and all (his) torso, and he became (ie was) nearly overpowered (lit: wanting-strength) because of her.

Verst hann fyrir henni um hríð, en hún sækir at koma honum undir sik,
He defends himself against her for a while, but she sought to bring him under herself,

ok nú hrekjast þau um bala nokkurn ok færast at steini einum, er þar stóð. Þat finnr hann, at hún vill koma honum á steininn. 
and now they drive-one-another across a certain grassy-bank and bring-each-other to a lone stone (boulder), which stood there. He finds (ie discovers) that, that she wants to bring him (koma + dative) to the boulder.