The Argentine challenger managed to hold off ten of the Monfils opportunities but still went down in just over 90 minutes as the Frenchman earned his 30th victory this season.
Czech sixth seed Tomas Berdych reached the last eight, but had to go the distance to overcome German Simon Greul 6-3, 4-6, 6-3 at the Putra stadium.
Berdych fired nine aces and saved the only two break points as he raced to post the win in just over two hours of battle.
"I think I played better today than in the first round," said the number 16 who holds the Munich title on clay. "I hope I can bring this level or even better in the next round.
"It's important to keep the consistency in the first matches of the tournament."
Berdych will face his next test against Sweden's Roland Garros finalist Robin Soderling, the third seed.
"I'll try to play my best tennis and serve well," said the Czech, who turned 24 a fortnight ago. "I'll look for chances to break his serve.
"Soderling's a very good player, especially indoors, so I'll have to play my best," Berdych said.
Monfils, who only arrived at the last minute after winning the Metz title at the weekend in France and then battling travel setbacks to finally reach Asia, has been dealing with jet-lag as he makes his start in Kuala Lumpur.
The 23-year-old number 13, now 3-0 over Vassallo Arguello, stands 2-1 to the good against Davydenko, with their last meeting in 2007.