Do this on the cruise mode (Drive, Single Event, Cruise) and choose Japan, then select the 15th Track.
Pick daylight and clear weather to help with visibility, then select any car. The gnome is not far from the start, after a left then a right hand bend. It's sitting in the garden of one of the last houses on the left side.
Just slow down and stop the car while looking at the Gnome but move forwards and backwards a few times if it doesn't pop.