From the apacite package documentation:
When you want to use natbib for citation and apacite for the reference list, you still need to load the LaTeX package apacite.sty (with \usepackage), because of the commands that are included in the BibTeX output. The best interoperability is obtained by loading apacite with the natbibapa option. There is then no need to load natbib explicitly, because apacite already does this.
So you should replace
\usepackage[sort&compress,authoryear]{natbib}
\usepackage{apacite}
with
\usepackage[natbibapa]{apacite}
From the t1enc package page on CTAN:
Obsolete package for activating T1 font encoding. The replacement fontenc package with (optional) argument T1 does this task more satisfactorily.
So you should replace
\usepackage{t1enc}
with
\usepackage[T1]{fontenc}
Other notes on your omnibus preamble:
- I don't use
utf8 encoding in my source files often enough to provide a definitive answer on this point, but you may want to consider utf8x vs. utf8 (inputenc) for a discussion of the relative merits of utf8x/ucs and inputenc.
subfigure is deprecated; use subfig or subcaption instead.
koma-script (of which your class, scrbook, is a part) implements nearly all functionality from the caption package, so you should consider using the built-in class options instead of using caption.
hyperref should be loaded last, with only a few exceptions.
Here's the complete code:
\documentclass[a4paper,12pt,twoside,BCOR=10mm]{scrbook}
% Packages
\usepackage{ucs}
\usepackage[utf8x]{inputenc}
\usepackage[icelandic, english]{babel}
\usepackage[T1]{fontenc}
\usepackage{graphicx}
\usepackage[intoc]{nomencl}
\usepackage{enumerate,color}
\usepackage{url}
\usepackage{appendix}
\usepackage{eso-pic}
\usepackage{amsmath}
\usepackage{amssymb}
\usepackage[nottoc]{tocbibind}
%\usepackage[sort&compress,authoryear]{natbib}
\usepackage[natbibapa]{apacite} % use `natbibapa' option instead of `natbib` package
%\usepackage[sf,normalsize]{subfigure} % deprecated; use other means
%\usepackage[format=plain,labelformat=simple,labelsep=colon]{caption} % use class commands instead
\usepackage{placeins}
\usepackage{tabularx}
\usepackage[pdfborder={0 0 0}]{hyperref} % moved to end of packages
\begin{document}
Test
\end{document}
apacitemanual, don't loadnatbibseparately, instead useapacitewith thenatbibapaoption like so:\usepackage[natbibapa]{apacite}. – Paul Gessler Aug 22 '14 at 18:32t1enc-- it's long been replaced byfontenc: see the faq answer on t1enc – wasteofspace Aug 22 '14 at 19:06