The word "labbikona" doesn't exist in icelandic language. not even in informal language. Think this is more of a nonsense-word, though you are able to understand it.
Labbi is probably from the noun "að labba" (to walk) and kona is of course just woman, eg. a woman who walks.
This is one of the humorous twist that cannot be translated from one language to another and still be funny.
We've got only two votes, if Bamsa enlarges that number I'll be able to accept it right away. That's why I'm asking for his opinion as an expert, otherwise this translation will take a quite long time until it gets enough votes to be validated.