yes, heat your attic
sanrishi, no need for the sarcasm about heating the attic.
If you understood venting principles, you would know a hot flue is a happy flue. Interior chimneys perform better than exterior chimneys all things else being equal. Why? Because they are warmer. If you enclosed the pipe in a small chase still meeting your clearances, the pipe will remain warmer. This will help maintain a stable draft and minimize the cooling of the stack gases to their dewpoint, which is where you're getting the condensation we're trying to help you with.
What does it say about you trying to put your hand on a hot pipe? Do you REALLY want me to answer that one? FYI, if it was B-vent as opposed to single walled pipe, it would feel cooler on the outer wall because the B-vent is insulated, therefore keeping more heat inside the pipe,which is what we're after.
Sorry I wasted my time trying to help an ingrate...
Keep the fire inside the fireplace.