From Jacqueline Simpson, Icelandic Folktales and Legends (Berkeley, 1972).
According to Simpson, the incapability of the hidden people to engage in sexual intercourse is a theory of the clergy, and counter to normal Icelandic folklore.
nce, there wwas a traveller who lost his way and did not know where he was
going. At last he came to a farm which he did not recognize at all; there he
knocked, and a mateure woman came to the door and asked him in, which he
accepted. All the funishings of this farm were excellent. The women led him
into the main room, where two pretty young girls were sitting, but he saw no
one else on the farm except for this woman and the two girls. He was welcomed
courteously, given food and drink, and later shown to a bed. The man asked if
he might sleep with one of the girls, and was told that he could. They lay
down together and the man wanted to turn towards her, but he could feel no
body where the girl was. He caught hold of her, but there was nothing between
his arms, though all the while she lay quietly beside him and he could see her
perfectly well. So then he asks her the reason for this.She says he need not be surprised at it, "for I am a spirit with no body," says she. "Long ago, when the Devil raised a revolt in Heaven, he and all who fought for him were driven into outer darkness. But those who were neither for him nor against him and would join neither army were driven down to Earth, and it was decreed that they should live in knolls, hills, and rocks, and they are called elves, or Hidden People. They cannot live with other people, only on their own. They can do both good and evil, and both in the highest degree. They have no bodies such as you humans have, yet they can show themselves to you when they wish. I am one of this band of fallen spirits, so it is not surprising that you cannot get pleaure from me."
The man had to rest content with that, and later he told the story of what had happened to him.
