Settu tvípunkt á eftir þessu orði.

Setja is the dictionary form, meaning to put / to place / to set.
Settu is the singular imperative form, so it means put! or place! when speaking directly to one person.

So:

• setja = to put
• settu = put! (said to one person)

This sentence is a command, so the imperative is needed.

Settu is for one person.

If you are speaking to more than one person, you would normally say:

Setjið tvípunkt á eftir þessu orði.

So the contrast is:

• Settu = command to one person
• Setjið = command to several people

Icelandic does not have an indefinite article like English a / an.

So where English says a colon, Icelandic simply uses the noun by itself:

• tvípunkt = a colon / colon

That is completely normal. Icelandic often leaves indefiniteness unmarked.

The dictionary form is tvípunktur.

In the sentence, it appears as tvípunkt because it is the direct object of the verb settu, so it is in the accusative singular.

So:

• tvípunktur = nominative singular, dictionary form
• tvípunkt = accusative singular

This is a very common pattern with masculine nouns in Icelandic.

Because it is built from:

• tví- = two
• punktur = point / dot

So tvípunktur literally means two-point or two dots, which matches what a colon looks like.

Here á eftir means after.

It is a common Icelandic expression used for placement or sequence. In this sentence, it tells you where to put the colon: after this word.

It is best to learn á eftir as a chunk here, rather than trying to translate each part too literally.

Because the word eftir takes the dative case, and that affects both this and word.

So:

• þetta orð = this word in nominative/accusative
• þessu orði = this word in dative

That is why the sentence has:

• þessu instead of þetta
• orði instead of orð

It is in the accusative.

The verb setja normally takes a direct object, and in this sentence the direct object is tvípunkt.

So the structure is:

• Settu = verb
• tvípunkt = direct object in the accusative
• á eftir þessu orði = prepositional phrase telling where to put it

This word order is the most natural and neutral one for this kind of instruction:

Settu tvípunkt á eftir þessu orði.

It follows a very common pattern:

• verb
• object
• prepositional phrase

Other orders may be possible in special contexts for emphasis, but this version is the standard one a learner should copy first.

A rough pronunciation guide is:

SEHT-tuh TVEE-punkt ow EHF-tir THESS-u OR-thi

A few useful points:

• þ is like th in thing
• ð is like th in this
• í is a long ee sound
• stress in Icelandic usually falls on the first syllable

So especially note:

• tví- sounds like tvee
• þessu begins with the thing sound
• orði contains the this sound in ð

Yes, depending on context.

The basic verb setja is very broad and often means put, place, set, or sometimes insert. In a writing or editing instruction like this, English might naturally say:

• Put a colon after this word
• Insert a colon after this word

Both can fit the Icelandic sentence well. The exact English choice depends on style more than grammar.