To be totally honest, this achievement is really easy to obtain. I didn't buy any extra health potions (I only used the ones I found) and I didn't even aim to get this achievement in the first place. I reckon if you played Fable 2 well enough, then you will probably get this with no problems! An easy tactic with any boss-type enemy is to stay back, blast them with your normal magic attacks and roll to dodge their attacks. Maybe it takes longer than most strategies, but its a sure-fire way to get through un-scathed. If you do get low on health, remember, you can just roll around for a few mintues to regain your health!
Just to confirm any suspicions; letting yourself get knocked out when re-enacting the lost play (in the bandit fight scene) does not count against this achievement and as far as I'm aware, this is the only quest that requires you to get knocked out. Also, playing in online Co-Op does NOT count towards this achievement. You MUST do this in a single player game (Although Banetopia points out that you can get the achievement if playing two player on the same console).
If you really want to be on the safe side and you have the money, stock up on health and time-slowing potions as these will mean all the difference for new or casual gamers.
On a final note, if you are struggling or you fall accidentally then you can follow jedimaster573's solution and immediately quit to dashboard.
The achievement will pop along with game completion achievements during the credits.