A film by Friðrik Þór Friðriksson, written by Einar Kárason (Icelandic title: Djöflaeyjan), 1996.
This DVD was part of my Christmas "haul" and is an off-beat film concerned with the lives of lower class people living in abandoned U.S. military barracks in Reykjavik in the late 1950's. It stars Baltasar Kormákur as Baddi, a rebel without a cause who lived briefly in the U.S. and returned with a pompadour and an attitude. His shiftless hedonism, based upon American pop culture, clashed with these impoverished families, in a unique, short-lived environment.
The film veers close to stereotype at times (with the usual quirky Icelandic tropes), but the high level of acting and the basic humanity of the characters kept it from veering into parody. There are sub-themes of alcoholism and despair, but ultimately the film is not depressing. A worthwhile effort about a unique historical situation which manages to embrace some universal truths.
Readily available through Amazon.
UPDATE: A newly published analysis of Devil's Island at Senses of Cinema...