The 22-year-old Argentine declared himself free of pain when he won his first match in a year in three sets on Monday but he was well beaten 6-2 7-5 by Germany's Florian Mayer.
Former US Open champion Juan Martin Del Potro's comeback from injury faltered on Wednesday when his lack of match practice was exposed at the Sydney International.
The 22-year-old Argentine declared himself free of pain when he won his first match in a year in three sets on Monday but he was well beaten 6-2 7-5 by Germany's Florian Mayer in the second round at the Sydney Olympic Park.
"Everything is tough after long, long time," Del Potro said. "But if I'm here it's because I want to play. I want to try again. That's what I'm thinking every day. I don't want to feel bad, you know.
"Last year was very bad year for me, and now I'm okay. I am in good shape... I lost, but I'm in the competition again."
Mayer, who lost to the former world number five at the Australian Open for the last two years, said it was clear his opponent was not anywhere near his best.
"Of course you could see he's not 100%. His serve is really strong, but from the baseline he missed a lot," said the German, who will next face lucky loser Lukasz Kubot or Potito Starace for a place in the semi-finals.
"But I really played well from the baseline. I knew when I played my game I had a good chance to win today, and I took it."
Top seeded American Sam Querrey's tournament lasted just 62 minutes before he was bundled out 6-4 6-3 by Ukrainian Alexandr Dolgopolov, who had had to finish his first round match earlier in the day.
It was the first time since 2002 that both top seeds had lost their first matches at the Australian Open warm-up after women's world number one Caroline Wozniacki fell at the first hurdle on Tuesday.
China''s Li Na confirmed her fine early season form by becoming the first player into the women''s semi-finals with a 3-6 7-6 6-3 victory over Russia's twice grand slam champion Svetlana Kuznetsova.
The world number 11, who reached her first Grand Slam semi-final at Melbourne Park last year, fought back from a set and 5-3 down to reach the last four at the tournament for the second time.
"We've played many times," said the 28-year-old. "Maybe at the beginning of the match I didn't have the energy to fight against her but when I was 5�3 down, I woke up again."
Kim Clijsters, the highest remaining seed after the early departure of Wozniacki and Vera Zvonareva, takes on Victoria Azarenka in their quarter-final later on Wednesday.
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