One process could be that the radiation is absorbed within the ball of gas, leaving us to see only what's being radiated by the outer surface of the ball. Likewise the light that we get from the sun is produced by a thin shell near its surface.
That depends on the number density and annihilation cross section. There has been a gamma ray excess from around the galactic core that's been puzzling for a number of years; one explanation was annihilation of dark matter, although other more mundane explanations (like emissions from a population of neutron stars) I think are preferred now.