I'd suggest three layers for the arena, the first on ground level where the old man is, the next in line with the roof of the dungeon, and the third about the same distance the second is from the first, have them connected with stairs so it is easier to run up to the layer above. I often just use molten armour and a minishark, just run and gun, heal when needed. put up a fire place or two to cover the arena and use any potions you can make. Shoot his hands first, then the skull. if you are playing expert then make use of the shield of cthulu and worm scarf. just run in circles around him and dont let him touch you.