I am a citizen of Turkey and hold a US visa. I will be traveling from US to Turkey with layovers in Iceland and Germany. I need to get my luggage in Frankfurt Airport and recheck it. Normally, I don't need a transit visa for Germany since I hold a US visa, but I have never had to recheck my luggage before. What kind of documentation do I need to reach the luggage area and connect to the final leg of my flight?
If, as I assume, you have a layover in both Germany and Iceland, the flight between them is an internal Schengen flight and to take it you will have to enter the Schengen zone on a short term visitor visa. And if you travel back the same way, you will need two of them or a multiple entry visa.
Even to just leave the international transfer area in Frankfurt you will need a Schengen visa, as there is no transit visa that will allow you to get your luggage and re-check it. And again the same for the way back if you fly the same route.
If you have not yet bought the tickets, better look at a different route. If you have just one stop in the Schengen zone and do not need to leave the international zone, you can indeed travel without having to get a Schengen visa.
And from your description of the flights, I assume you have two different tickets, where the second airline is not bound to get you to your destination if your first flight is delayed. If so, you will need a long layover, so you will not miss your second flight if you are delayed on the way in, you need more time to pass through immigration and security and such.
You can check details for needed visa on the same database airlines use, Timatic, this is the IATA site there are more airline related sites as well.
More information about intra Schengen flights and their visa can be found in the answers to this question.