I heard the Blue Lagoon is pretty nasty if you look into the water (think thousands of tourists and their body hairs coalescing in water all day...)
When I looked in it (the water in the Blue Lagoon), there was nothing sinister, and the silica gel did WONDERS for my poor psoriasis. Definitely worth doing ... I went to a swimming pool in Reykjavik and the Myvatn baths, but whilst the water was nice, it was in no way as therapeutic for my skin!! And the views were less breathtaking, but that shouldn't be a deal breaker I suppose! ENJOY ... but don't forget that many places have communal changing areas (ladies and gents ARE separated) but you are expected to shower in your birthday suit.