Translation:The old wizard was looking for a wife.
A troll is the specific, rather dumb creature, looking like in the image here: http://en.wikipedia.org/wiki/Troll, but I don't think they can always even trolla at all, that seems to vary in different regions. Sometimes they're more like just stupid giants. but trolla is the generic word for using magic, as witches and magicians do.
Sometimes, -e is used to refer to masculine things. It's a remnant from medieval times when Swedish still had three grammatical genders (like German still has), and then -e was the masculine ending. Nowadays, -e used only rarely and when referring to actual biologically masculine humans.
It's still possible, accepted and recommended to use -a instead, as that is accepted for everybody.
It might depend on where you’re from as well. I’m used to the -e being very normal and I wouldn’t agree on ”used only rarely”. Not so long ago I remember the TV host presenting Dr. House as ”den cyniske doktorn”. However, as you say -a always works as well.
And you don’t have to go back to mediaeval times to find the masculine/feminine distinction. The central Swedish dialects lost it in around the 18th-century and other dialects much later.
Yes, sometimes you hear things like "Hon var hans kvinna" meaning 'she was his woman' or 'she was his wife' (both meanings are possible). "Fru" is always a married woman, while "kvinna" can be any woman (though usually used to specify that a girl has flowered, so you should't call a 6-year-old girl "kvinna").