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The Spanish world number one suffered a shock fourth-round defeat to Roger Soderling at the French Open as he missed the chance for a fifth consecutive triumph on the clay of Roland Garros, and has since been troubled by knee problems.
Nadal, 23, did not play at Queen's, where Murray went on to become the first home-grown winner in 71 years, but was scheduled for a practice session at Wimbledon on Tuesday and may yet take up the invitation to play an exhibition match at the Hurlingham Club on Friday.
Nevertheless, Borg - the last man before Nadal to win both the French Open and Wimbledon in the same season - feels the Spaniard will be a spent force at SW19.
"Nadal is always a dangerous player because he is the best in the world - but what happened in Paris and then the injury, I am picking Murray or Federer," said the Swedish ace, who shocked the tennis world when he retired at the age of just 26 in 1983 with 11 Grand Slam titles already to his name, six of which came in Paris.
"For Nadal to win five in a row <1/8>at the French Open<3/8> was a big goal this year.
"I am sure he was very, very disappointed when he went home after Paris. That defeat took him many, many days to get over.
"Nadal is saying he has got an injury, but he has to be fit at Wimbledon if he wants to go all the way, and I do not think he will go all the way this year."
Borg, though, believes Murray, now up to third in the world rankings, has got what it takes to become a first British winner at SW19 since Fred Perry back in 1936.
"Andy has had a great year," said Borg, who was in London on Tuesday for the launch of the HSBC Champions of Wimbledon.
"I do not think he was ready to win Wimbledon last year, but it is a different story now. He is ready to win it this year.
"He has no weaknesses, he can play on all kinds of surfaces and I was very impressed what he did on the clay court surface. He was hitting the ball extremely well.
"Andy Murray seems to find himself on the court and knows how to behave, focus and play his game.
"He has matured a lot as a person over the last year and as a tennis player.
"If you compare him now to a few years ago he is a completely different player on the court.
"He is ready to win a Grand Slam tournament and is one of my favourites to win Wimbledon.
"Andy is physically and mentally strong, but there is going to be huge pressure - however, he can handle it if he focuses on the things he can do."
Borg added: "If not Wimbledon, he can win the US Open, but if he does not win Wimbledon this year, then he has a good chance in the years to come.
"One day, eventually, Andy Murray will win Wimbledon."
Rafael Nadal at the 
Rafael Nadal, the 2008 Men's Singles winner at , announced today his withdrawal from the  because of a knee injury caused by his .  The formal announcement came after he had played the second of his warm-up matches.


On Thursday, whilst playing , Nadal had experienced issues with moving about the court.  Again, whilst playing  today, he had problems and lost the match.

He will be the first champion to not defend his Wimbledon championship since  pulled out in 2002.

As a result, fifth seed  takes Nadal's place in the first quarter of the draw, seventeenth seed  takes del Potro's place in the fifth quarter,  becomes the thirty-third seed and takes Blake's place in the fourth quarter, with his own previous spot now filled by lucky loser .

 was quoted on Tuesday (June 16) as saying "Nadal is always a dangerous player because he is the best in the world — but what happened in Paris and then the injury, I am picking Andy Murray or . … For Nadal to win five in a row (at the French Open) was a big goal this year. I am sure he was very, very disappointed when he went home after Paris. That defeat took him many, many days to get over. Nadal is saying he has got an injury, but he has to be fit at Wimbledon if he wants to go all the way, and I do not think he will go all the way this year."