Does this still exist? I was not able to find it in October 2016.
Yes. I think it is still around, their facebook page is active and posting https://www.facebook.com/reykjavikrecordshop/
The Google Maps Geocoding (that turns addresses into gps points) seems to not be very accurate for Reykjavik. Klapparstígur 35 is actually a bit futher up the street than the marker here suggests