Here’s my translation

Alan

Þeir mættust nú Knútr ok Sigrgarðr. 
They, Knútr and Sigrgarðr, now meet-one-another.

Knútr lagði til hans með kesjunni þeirri er ávallt varð manns bani. 
Knútr thrust at him with the-halberd, that-one which always became a person´s (man’s) bane.

Sigrgarðr stökk í loptit, en spjótit kom í lokugatit á vindásinum ok gat hann ei aptr kippt. 
Sigrgarðr sprang into the-air, but (and) the-spear came into the-latch-hole on the-windlass and he was-not-able to pull (it, the spear) back.

Sigrgarðr kom niðr á spjótskaptit ok braut í sundr fyrir framan hendr honum. 
Sigrgarðr came down on-to the-spear-shaft, and (he, Sigrgarðr, or it, this action) broke (it, the shaft) asunder in-front-of his (ie immediately point-side of) (Knútr´s) hands.

Hjó hann þá til Knúts. 
He hewed then at Knútr

Knútr sá ei færi sitt til úrræða, hljóp hann þá fyrir borð, sverðit kom á borðstokkinn, ok var undir járnboltr mikill. 
Knútr saw not his opportunity for help (an expedient way out), he leapt then over-board, the sword came on-to the bulwarks, and a large iron-bolt (nominative) was (ie lay) under-(neath).

Kom sverðit í járnboltinn, ok stökk í sundr undir hjöltunum. 
The sword came into (entered, penetrated) the-iron-bolt, and (it, the sword) flew asunder below the guard (of the sword) (pl of hjalt, CV).

Sigrgarðr stökk fyrir borð eptir Knúti, ok fundust þeir á mararbotnum ok var þeira atgangr bæði harðr ok langr, ok ætlaði hvárr at festa annan á grunni. 
Sigrgarðr sprang over-board after Knútr, and they met-one-another on the-sea-bottom, and their combat was both hard and long, and each intended to fasten (pin) (the) other to (the) shoal-ground.

Sigrgarðr hafði tekit í posann þann sem kerling hafði fengit honum, ok brugðit yfir andlit sér, ok mátti hann þá vera í kafi svá lengi sem hann vildi. 
Sigrgarðr had taken into (the water, underwater, í kafi with kafi understood) the-little-bag, that which (the) old-woman had gotten for him, and quickly-moved (ie drew) (it) over his face, and he then was able to be under-water as long as he wanted.

Hann var þá svá líkr Knúti inum knappa at yfirlitum at hvárigan mátti frá öðrum kenna, en síðan sprengði hann Knút köfum. 
He was then so like Knútr the brisk (or knob) in appearance that (one) was-able-to recognise neither (of the two) (accusative of hvárigr) from (the) other, but (and) after-that he caused Knútr to burst (he broke the wind of Knútr, cf sprengja hest) from gasping-for-breath (kaf, plural, CV) (ie it sounds like Sigrgarðr drowned Knútr by not allowing him to come up for air).

Síðan fór hann í öll hans klæði.
After-that he (Sigrgarðr) went into all his (Knútr’s) clothing. (ie another impersonation trick looks like it´s about to happen)

En þeir Stígandi ok Hörðr höfðu rutt skipin á meðan, ok gekk þeim þat vel, en þegar þeir skutu eða hjuggu til Harðar þá brá hann við ýmist dausnum eða krippunni, ok brotnaði hvert vápn sem þar kom í. 
But (And) they, Stígandi and Hörðr, had cleared the-ship in-the-meantime, and that went well for them, but (and) as-soon-as they (ie Knútr‘s men) shot or hewed at Hörðr, then he warded (it) off sometimes with the-rump (ie his butt) or sometimes with the-hump (his bulge), and each weapon (nominative) which came there-in was broken.

Var þat allt jafndrjúgt at þeir höfðu rutt drekann, enda kom þá Knútr upp úr kafinu á þat skip sem næst var drekanum. 
That was all so-ample (guessing: they had done all they could and reached the point? jafn + drjúgr) they had cleared the dragon (prowed warship), and-of-course Knútr (really Sigrgarðr in disguise) then came up out-of the water on to that ship which was next to the-dragon (prowed warship)

Kallaði hann þá, ok bað menn ei berjast við höfuðlausa menn. 
He called then, and bade people (men) not to fight with leaderless (lit: headless) people (men).

Kvað Sigrgarð vera dauðan á mararbotni. 
(He) declared Sigrgarðr to be dead on (the) sea-bottom.

Brá mönnum mjök við þessa sögu. 
This telling (ie story) startled people (men) much (e-m bregða við e-t, Z9).

Gafst þá upp bardaginn.
The battle (nominative) then was-given up (ie conceded, surrendered).

Fátt var fallit af liði Sigrgarðs; en mestr hluti var fallinn af liði Knúts. 
Few were (had) fallen (in battle) of Sigrgarðr’s troops, but (and) (the) greatest part of Knútr’s troops was (had) fallen (in battle)

Bauð hann þá öllum mönnum grið sem með Sigrgarði höfðu verit. 
He offered then a truce to all persons (men) who had been with Sigrgarðr.

Þeir Hörðr ok Stígandi gengu til handa, ok sóru honum trúnaðareiða. 
They, Hörðr and Stígandi submitted, and swore to him an oath-of allegiance.

En eptir þat bað Knútr alla þá menn sem með Sigrgarði höfðu verit sigla heim aptr í Garðaríki eðr hvert sem þeir vildi, ok ei vildi hann af þeira herfangi hafa at væri eins skildings. 
But (And) after that Knútr bade all those men who had been with Sigrgarðr to sail back home to Garðaríki (Kingdom of Russia), or where-ever they wanted, and he wanted not to have (take) booty from them that would-be (a booty) of one shilling (he did not want so much as a single shilling from them as a booty).