  We model the OH megamaser emission from the luminous infrared galaxy IIIZw35
as arising from a narrow rotating starburst ring of radius 22 pc enclosing a
mass of 7 x 10^6 Msun. We show how both the compact and apparently diffuse
maser emission from this ring can arise from a single phase of unsaturated
maser clouds amplifying background radio continuum. The masing clouds are
estimated to have a diameter of <0.7 pc and internal velocity dispersion of
about 20 km/s. We find that the clouds are neither self-gravitating nor
pressure confined but are freely expanding. Their dispersal lifetimes may set
the vertical thickness of the ring. For an estimated internal density of 3 x
10^3 cm^-3, cloud masses are of order 24 Msun. The observed spectral features
and velocity gradients indicate that the clouds must be outflowing and escaping
the nucleus. The cloud mass outflow rate is estimated to be 0.8 Msun/yr, while
the star formation rate is about 19 Msun/yr. Associated ionised gas, possibly
generated from dissipated clouds, provides free-free absorption along the
source axis, explaining the observed East-West asymmetries. We show that the
clumpiness of a maser medium can have a dramatic effect on what is observed
even in a relatively low gain OH megamaser. Specifically, in IIIZw35 our clumpy
maser model naturally explains the large line to continuum ratios, the large
1667MHz:1665MHz line ratios and the wide velocity dispersions seen in the
compact maser spots. Other astrophysical masers showing both compact and
apparently diffuse emission might be explained by similar clumpy structures.
