The cache is a small film canister. Don't worry about the slightly private location, I'm good friends with the owner of the property!
Reykjavik's harbour area is still very much a working part of the city but the old fishing huts have been restored and there are plenty of shops and cafes to explore. Along the western edge of this small area, you can find out all about the whale watching, angling and puffin spotting that goes on. But you don't have to go on a boat (or even a bus) to see the area. If you want wheels you can get those too.