The gnome can be found on a ledge above you part way through level 1. It is large and brightly colored and easily seen. Keep it with you as you progress through the game. You will see some huge fans above the top of a volcano towards the end of level 12. Some robots will mention that they are trying to cool the lava. Toss the gnome into the volcano to earn the achievement or trophy.
There are 5 Bronze Trophies, 5 Silver Trophies, and 1 Gold Trophy.