You have to defeat most of the opponents and nests/ballistas before you will automatically return to the battle tower (there is no way to go back early in this encounter).
If you use Target Lock (left trigger) and circle around a ballista, you should be able to easily take it out at close range with Dragonbreath or longer range with Fire Sphere. Don't head directly towards a ballista you wish to attack (fly at an angle or come from around or behind one of the flying fortress sections) and they shouldn't be able to hit you very much, if at all. The number of ballistas at the start of the fight makes them more dangerous, but once you take out a few, that stops being an issue.
They are not really fast turning, so attack quickly, break off, heal if necessary, circle around a bit and attack again from a different direction.
Lowering the game difficulty, if you are not already playing on casual, should help.
In the original release of D2:ED you would have a dragon skill point at that point you could put into Dragon Spirit, but a skill book (given by the librarian in Maxos temple) was removed in DKS. You can still get one if you explore the fjords before getting the battle tower, though (the book will still be there later, if you don't get it early).
Did you equip any dragon armour you may have found? Another couple are available shortly after you finish that fight.
If you fly away behind the battle tower you should be pretty safe, and can use a spell or potions to heal, etc.
On the Xbox, a burst of speed is triggered by the left shoulder button. On the PC this is done by right clicking or hitting the 'E' key.
D2:ED topics (though pretty much the same in DKS);
first time dragon help needed pleaseWhy is dragon so hard?