Hi Srikanth,
3dvolreg shouldn't care the datasets have been obliquified. So I think the issue is the size of the datasets. The 3dWarp step can create datasets larger than the original in order to resample to the new coordinates. In fact, that is the default. The resolution of the output matches the smallest dimension of the input dataset. You can override this by using either the -newgrid or -gridset options.
Still this dataset, based on your error message, is only about 512 MB, which isn't too big. If the datasets are in float format, you could reduce the size by changing the datum type to short using 3dcalc.
You can check memory size in Linux with "cat /proc/meminfo" or "free".
If you still can't make any headway, go ahead and upload the data, and I'll take a look at it.