Hi Tanmay,

It's not as far outside the brain as I had initially understood. This is probably just the issue of low variance outside the brain. See e.g. Reimold's or my paper:
  http://www.ncbi.nlm.nih.gov/pubmed/16208...
  http://www.ncbi.nlm.nih.gov/pubmed/22037...
And try making a tighter mask (are you using absolute/relative threshold masking or an explicit mask, or just implicit?)

Which image are you overlaying your results onto? I would recommend using ImCalc to create a mean (or median) of the spatially normalised bias corrected images, as this is probably the most representative image for your subjects.

Best,
Ged