My friend told me he unlocked the Tower of Nannar by collecting 7 gold skulls. I unlocked it with 6. When you complete the level that you get the required number of skulls on a little message at the bottom will pop up showing "Tower of Nannar Unlocked". Back out to the mode select menu and you will see Tower of Nannar listed under Arcade Modes. It consist of 10 levels. Level 5 and 10 are boss levels. As AdamHairsine said in his solution, it is best to use the Space Marine because he shoots faster. I retried 3-5 times on each level so they are not too bad. Level 10 boss I did 10 times, but it seems to get a little easier each time.
Do not back out to menu or turn off xbox before finishing the tower. It does not save your progress and you will have to start over at level 1. Only takes about an hour to finish though so shouldn't be too much of an issue.