Aye, sure, an' it be a Scottish word, don' it?
Okay, Webster1913 isn't exaggerating much when he says that forby is obsolete, but it's not quite so obsolete in Scotland. Forby is a Middle English* word with many different meanings, defined below. It is a combination of fore-, meaning 'before', 'ahead', or 'previous', and 'by', the meaning of which has changed very little in the ensuing centuries. Forby had a good run, but it is dying out in modern English, except for occasional usage in Scotland. Not living anywhere near Scotland or Scottish people, I cannot say how common it may be these days, but it's not dead yet.
If you live somewhere besides Scotland where forby is still used, please /msg me. DonJaime reports that forbye was used Newcastle upon Tyne at recently as the 1970s.
Pronounced 'for-bi'. Also written forbye. As forby has been used for centuries, and is often written in emulation of the local brogue, it may also be spelled 'forebye', 'ferby', 'firby', 'furbye', 'forbyes', 'forbyse'... you get the idea. Forby and forbye are by far the most common spellings.
1. prep. and adv. By; 'through the agency of', 'through means of'.
"...took her up forby the lily hand" -- Edmund Spenser.
2. prep. By, past, near.
"Bewailing in my chamber thus alone,
Despeired of all ioye and remedye,
Fortirit of my thoght, and wo-begone,
And to the wyndow gan I walk in hye
To se the warld and folk that went forby."
-- The Kingis Quair, by James I of Scotland.
Still in (occasional) use:
1. prep. and adv. Also, furthermore, moreover. "You're a liar and a thief, lassie, and forby ye tried to kill me too" -- Rose Macaulay. "Keep thy breath to cool thy poddish, forby thy mug of yal" -- Hall Caine, The Shadow of a Crime.
2. adj. Unusual, exceptional. "'I tell ye that', sez Sally, 'the man has a forbye luk.'" -- Wesley Guard Lyttle Robin's Readings.
3. prep. and adv. Next to. (No literary example; reported heard in Newcastle).
* liveforever says: The Danish current usage for "forbi" is mostly equivalent to the second archaic form that you mentioned. According to my etymological dictionary of Danish, "forbi" is Old New Danish dating from the 1500s, borrowed from Middle Low German (1500s). I suspect the source of both the English and German words is an older Germanic (Old Saxon?)
Tem42 says: I cannot find any sources to confirm this, but it sounds right. If you have any info, please /msg me!
Webster's Third New International Dictionary, 1981
Thanks to mauler, jwfxpr, liveforever and DonJaime for their help and feedback.