Our cruise which leaves from Newcastle to the Faeroe Islands
Is this some commercial cruise specially timed to be in the Faroes in time for the eclipse? The commercial ferry services which previously enabled people to get from Newcastle to the Faroes via Bergen no longer run. There is still a ferry from Denmark to the Faroes. I'm not sure sailing the North Sea in winter would be my idea of fun.
Going to the Faroes to try and see an eclipse is terribly risky. It is a very, very cloudy place. I missed the last European eclipse in southern Germany because the clouds cleared about a minute too late. Obviously you can't guarantee cloud-free skies anywhere, though Longyearbyen would perhaps have a better chance than the Faroes.
We want to do a volcano hike, where do you suggest
Iceland isn't this land of perfect volcanic cones like Guatemala or Chile. Its volcanoes are often rather messy fissure eruptions, or sub-glacial, resulting in structures that don't look like cones at all, and many of them aren't very high at all, in fact some of them are more like holes than mountains. There isn't much "climb a volcano" in Iceland, even in summer, though there are a few tall cones popular with climbers, and those are not casual hikes even in summer. There are some little cinder cones and pseudocraters you can walk up, eg around Myvatn, for instance, which create a false impression of climbing a volcano, because they looks like a popular impression of a volcano, but they aren't actually volcanoes. But you are going when it is still full-on winter, so expecting to be able to climb a big cone, unless you are an experienced winter mountaineer, is unrealistic. And probably the other walks that are in fact over volcanoes that don't look like what people explect volcanoes to look like wouldn't count for you. More realistic to research winter hiking in Iceland see what options come up. The coastal strip is often snow free even in full-on winter, though the weather is often unpleasant.
The best place to see the northern lights at that time of year?
The very best place is Kangerlussuaq in Greenland. Failing that, if you are restricted to Europe, try far northern Finland. But if you want somewhere in cloudy Iceland, then the best place is where it isn't cloudy at that moment, which can be best ascertained with a short term weather forecast and those on-line real-time satellite cloud images. If you need to book in advance, try the north, but it could be wrong.
We have heard to see Skogafoss on our trip.
Not a problem. It's right next to the main road about 2h30 out of Reykjavik. There can be some intermittent disruption to your ability to drive there during snowfall, storm, etc.
Any advice would be helpful so we can plan this adventure.
Read a guidebook. Remember it is still full-on winter in Iceland in March. To get best advantage, forget your preconceptions and research the "best" things to do in Iceland in winter, remembering that what is best for you may be poison for me and vice versa.
Than return to Newcastle and fly from Edinburgh to Reykjavik
There are direct flights from Faroe to Iceland.