you should have a dynamite bow when killing margruger, its in your bow slot. you can also just throw dynamite for this technique. firstly on the floor are these circles, time your shots so you throw/shoot some dynamite onto them and it blows up when his standing on or near one of them. after doing this a few times he'll retreat to a castle sort of thing where you need to shoot the dynamite when he throws it.
if you need any more help, just ask =D
tree man will turbanate you...