Ok so here it is... almost two dacades later.

Hörpukvæði is what we call a sagnadans(story dance) also known as fornkvæði(old song). We only have the words to it but the melody has been lost. It would be interesting to see if the faroese version fits together with the icelandic one musically.

It has the two sisters, a suitor, a river and some of fates of the characters are similar to the other european versions.
A summary of the words and it's origin story can be read on page 177 in Vésteinn Ólafssons doctoral thesis The traditional ballads of Iceland : historical studies which is probably the most thorough work on sagnadansar that available in english.

The full words can be found (in arcaic icelandic writing)on page 89 in this icelandic/norweigan book called Íslenzk fornkvæði. I have a later version(Fornir dansar) of the same book in modern icelandic writing.

There is another one which has some similarities with Two sisters called Systrakvæði(sisters song). This one we have the music to and you can hear this fakelore dance troup do a pretty boring version of it. The story is quite different. Two sisters meet a knight who wants to marry them but they say they'd rather die. So he kills them and takes their capes. He then rides to the third sisters house and asks to sleep with her in exchange for a cape. She recognizes it, tells her father who furiously throws a harp to the floor and then fights the knight for three days and kills him. The sisters return as spirits to the church.
As you see it has hints of being related, and the stanzas fit, but mostly it is actually a version of a third ballad, Harmbótarkvæði, but we won't get into that :)

There is still some digging to do, finding a way to sing Hörpukvæði and understanding the context. There is plenty of academic research around as the links above show. As more stuff comes up I might add it on to here but I'll probably end up writing something comprehensive in icelandic.

Allrighty. I hope that some of the people who have posted on this thread in the last 18 years read this and get something out of it.