Thanks again d3developer.  I don't mind at all. Here are the visualforce page and the apex controller. Keep in mind that this is a work in progress so it's not the cleanest of code :)

How can I avoid this being rendered as an iframe? I am using this as an inset on a page layout, and I thought the system would always render that in an iframe. (See my screenshot below)

Here is the visualforce page:

<apex:page sidebar="false"  standardController="CustomLead__c" extensions="VF_SaleLineItemController"> 
    <script language="javascript">
        window.onload = function resizeIframe() {
            var thisWindow = window.name;
            if(thisWindow){
                var iframes = parent.document.getElementsByName(thisWindow);
                if (iframes && iframes.length == 1) {
                    var height = document.body.scrollHeight;
                    iframes[0].style.height = height + "px";
                }
           }
        }
        
        function setTarget( link, value ){
           alert( link + " ---- " + value );
           var cmdLink = document.getElementById( link );
           var statusField = document.getElementById( value );
           
           alert( statusField.value );
           alert( cmdLink.target );
           alert( cmdLink.rerender );
           
           if( statusField.value == "Unnin sala" ){
           	cmdLink.target = "_parent";
           	//cmdLink.rerender = "null";
           }
           else{
           	cmdLink.target = "";
           	//cmdLink.rerender = "projectList";
           }
           
           alert('after');
           alert(cmdLink.target );
           alert( cmdLink.rerender );
        	
        }
    </script>

    <!--<apex:sectionHeader title="Edit Projects" subtitle="{!$User.FirstName} {!$User.LastName}"/>
    <p/>-->
    
    <apex:pageMessages />
    <apex:form >    
    
    <apex:actionFunction name="saveEdit" action="{!saveEdit}"/>
    
    <apex:pageBlock title="Bæta við nýrri Sölulínu" mode="edit">
      Vöruflokkur:   <apex:inputField value="{!newLine.plProductCategory__c}"/> 
      Afgreiðsla:   <apex:inputField value="{!newLine.plTransactionType__c}"/> 
      Staða:   <apex:inputField value="{!newLine.plStatus__c}"/>  
      
   
        <apex:commandLink action="{!add}">
            Create
             <apex:param name="parent" value="{!CustomLead__c.Id}"/>
        </apex:commandLink>
            
    </apex:pageBlock>
    
    <apex:pageBlock >
    <apex:outputPanel id="projectList">
    <table>
        <tr>
            <th style="width:40px"> </th>
            <th style="width:80px"> </th>
            <th style="width:90px">Vöruflokkur</th>
            <th style="width:90px">Afgreiðsla</th>
            <th style="width:90px">Staða</th>
            <th style="width:90px">Afgreitt?</th>
            <!--<th style="width:90px">Weighting</th>-->
            
        </tr>
        <apex:repeat value="{!lines}" var="p">
        <tr style="height:20px">
            <apex:outputPanel id="editRow" layout="none" rendered="{!p.Id == editLine.Id}">
                <td><apex:commandLink action="{!cancelEdit}" rerender="projectList">Cancel</apex:commandLink></td>
                <td><apex:commandLink action="{!saveEdit}"  rerender="projectList" target="_parent" id="cmdLink">Save</apex:commandLink></td>
                <td><apex:inputField rendered="{!p.Id == editLine.Id}" value="{!editLine.plProductCategory__c}"/></td>
                <td><apex:inputField rendered="{!p.Id == editLine.Id}" value="{!editLine.plTransactionType__c}"/></td>
                <td><apex:inputField rendered="{!p.Id == editLine.Id}" value="{!editLine.plStatus__c}" id="statusField" onChange="setTarget('{!$Component.cmdLink}', '{!$Component.statusField}')"/></td>
                <td></td>
             
            </apex:outputPanel>
            <apex:outputPanel id="viewRow" layout="none" rendered="{!p.Id != editLine.Id}">
                <td width='60' colspan='2'>
                    <a href="{!$Site.Domain}/{!p.Id}/e?retURL={!CustomLead__c.Id}" target="_top"><b>Edit</b></a>&nbsp;|&nbsp;
                
                    <apex:commandLink action="{!del}" onclick="return confirm('Ertu viss um að þú viljir eyða þessarri línu?')"><b>Del</b>
                        <apex:param name="delid" value="{!p.Id}"/>
                    </apex:commandLink>
                    | &nbsp;
                    <apex:commandLink action="{!edit2}" rerender="projectList">QuickEdit
                        <apex:param name="editid" value="{!p.Id}"/>
                    </apex:commandLink>
                    
                </td>
                
                <td><a href="{!$Site.Domain}/{!p.Id}" target="_top">{!p.plProductCategory__c}</a></td>
                <td>{!p.plTransactionType__c}</td>
                <td>{!p.plStatus__c}</td>
                <td>{!p.cbAfgreitt__c}</td>
                
            </apex:outputPanel>
        </tr>
        </apex:repeat>
    </table>
    </apex:outputPanel>
    </apex:pageBlock>

    </apex:form>
    
</apex:page>

 This is the controller extension:

public class VF_SaleLineItemController {
    

    public Id parentId{get;set;}
    public String javaString {get;set;}
     
    public SaleItemLine__c newLine {get;set;}
    public SaleItemLine__c editLine {get;set;}
   
      
    public VF_SaleLineItemController(ApexPages.StandardController standardController) {
        
        newLine = new SaleItemLine__c();
        editLine = new SaleItemLine__c();
    }
    public VF_SaleLineItemController() {
       
        newLine = new SaleItemLine__c();
        editLine = new SaleItemLine__c();
       
    }
    
   
    public SaleItemLine__c[] getLines(){
        Id parent = System.currentPageReference().getParameters().get('Id');
        return [SELECT plStatus__c, cbAfgreitt__c, plTransactionType__c, plProductCategory__c FROM SaleItemLine__c WHERE CustomLead__c =: parent ORDER By CreatedDate DESC];
    }
    
    public String getParam(String name) {
        return ApexPages.currentPage().getParameters().get(name);   
    }
    
    public PageReference add() {
        try {
            String strParent = getParam('parent');
    
      
            this.newLine.CustomLead__c = strParent;
            INSERT newLine;
            newLine = new SaleItemLine__c();
            editLine = null;
            
        } catch (Exception e) {
            ApexPages.addMessages(e);
        }
        return null;
    }
     
    public PageReference del() {
        try {
            String delid = getParam('delid');
            
            SaleItemLine__c line = [SELECT Id FROM SaleItemLine__c WHERE Id=:delid limit 1];
            DELETE line;
            
        } catch (Exception e) {
            ApexPages.addMessages(e);
        }
        return null;
    }
    
    public PageReference edit2() {
        try{
            String editid = getParam('editid');

            editLine = [SELECT CustomLead__c, plStatus__c, cbAfgreitt__c, plTransactionType__c, plProductCategory__c FROM SaleItemLine__c WHERE Id=:editId];
        }
        catch(Exception e){
            ApexPages.addMessages(e);
        }
        return null;
    }
    
    public PageReference cancelEdit() {
        editLine = null;
        return null;
    }
    
   
    public PageReference saveEdit() {
        try {
           
            UPDATE editLine;
            
        } catch (Exception e) {
            ApexPages.addMessages(e);
        }
        
        if( editLine.plStatus__c == 'Unnin sala' ){

            PageReference newPage = new PageReference('/' + editLine.Id + '/e?retURL=/' + editLine.CustomLead__c );
           
            newPage.setRedirect(true);
            editLine = new SaleItemLine__c();
            return newPage;
            
        }
        else{
            editLine = new SaleItemLine__c();
            return null;
        }
    }
        

}

 And here is a screenshot of my page layout:

Again my thanks for all the help.

Ivar