This morning I found some free Icelandic music compilations made by Paul Sullivan. He's the writer of the excellent book on Icelandic music, "Waking up in Iceland" (2003), a book you have to read if you're already into Icelandic music, or if you want to know much more about the music scene.
He's also the content editor of the website of Iceland Music Export.
The first section "101" (downtown area of Reykjavik) contains pop & rock tunes.:
Valgeir Sigurðsson, Eberg, Emiliana Torrini, Benni Hemm Hemm, Skakkamanage, Borko, múm, Sin Fang Bous, Mammút, and others
The second section "Beyond 101" features the classical & experimental scene:
Jónsi & Alex, Valgeir Sigurðsson, Amiina, Kippi Kaninus, Hildur Guðnadóttir, Mýrin, Ben Frost, and others.
2 ZIP files available here: