Nadal beat German veteran Tommy Haas 6-4, 6-3, 6-4, declaring that the twisted tendon in the heavily taped knee was not a concern.
Just before Federer was due at Hisense Arena, the Swiss player found out that his scheduled opponent, Germany's Andreas Beck, had a back injury and had to withdraw.
"Now, I'll just take it easy this afternoon and come out tomorrow and hit intensely, and then I'll be ready for the next match," said Federer, a four-time Australian Open winner.
Nadal, asked after his match if he would have appreciated the same kind of good fortune as Federer, was pragmatic.
"Before the day started, yes," he said, smiling. "Now that I've played and won, I'm happy. It was a positive match, but not that demanding. We didn't play four hours, five hours. Three sets, so it wasn't that tough."
Nadal and Federer could meet in the semifinals next week.
Nalbandian had several run-ins with the chair umpire during the often tense match against Isner. The Argentinian was enraged when a tournament official refused to overrule the chair umpire's decision to decline a review of a line call late in the fifth. He later smashed his racket to the ground in disgust when he netted a backhand on match point.
"It's ridiculous playing this kind of tournament with this kind of umpires," Nalbandian said. "I didn't understand in that situation, 8-all, break point."
Ivo Karlovic of Croatia beat Carlos Berlocq of 7-6 (4), 3-6, 6-3, 6-4 and will play Federer in the third round, while 13th-seeded Alexandr Dolgopolov of Ukraine defeated Tobias Kamke of Germany 4-6, 6-1, 6-1, 3-6, 8-6.
Nadal figures he's in strong shape to add a second Australian Open title to the one he captured in 2009, one of his 10 Grand Slam singles titles.
"I've been practicing well, I've had a very good preparation in my opinion," Nadal said. "I've won two matches in straight sets with positive feelings."
Information from The Associated Press was used in this report.