Keep moving; hit target lock and circle around while holding the Fire Breath trigger/key down. Once you take out most of the opponents you will automatically return to the battle tower.
You should have one skill point that you can put into Dragon Spirit, and can fly away behind the battle tower to use it to heal or otherwise rest up. You can get a second dragon skill point if you explore the fjords before getting the tower, but then you would be a high enough level (about 22 or 23) that you wouldn't be having much trouble here.
You should have collected some dragon armour as well, though I don't recall any particularly useful skill bonuses on them (at least not for my play style).
first time dragon help needed pleaseWhy is dragon so hard?