When the wave begins, Magic Arrow to get a fiery start. When playing with another player, have Murtagh continue to fire arrows due to their speed. The Urgals that shoot fiery arrows are the most dangerous. The best way to defeat them is to fire a magic arrow, then go to them directly and kill them by grappling attacks. You can kill most of your enemies by grappling attacks
Keep holding BLOCK and use the fire move against him. You will still have to dodge when he is about to grab you.
Hold R + L and shoot Fire Arrows at him on his demonic steed. When he fires purple missiles at you, release R and keep L held. Press A rapidly, and Eragon will deflect the missiles back at Durza. However, when the Shade fires Fire Balls, you cannot deflect them. Just dodge them. Continue this until he is dead. There is a secret egg in this level, but is extremely difficult to find. Look for the telltale blue dot on the screen.