The 27-year-old Nadal has been forced to play the season opening grand slam with strapping across his left hand due to the sore, which is painful enough to compromise his aggressive style of play. (Agencies)
Holding the racket is not a problem and he remains able to hit his powerful topspin forehand but the world number one has found it increasingly difficult to control his serve as the tournament has progressed.
"Serving with this injury leads to problems with the rest of my game," he said.
"When you lose confidence with one shot, an important shot, then you are not able to feel comfortable about the rest of your shots,” he said.
"I will try to improve that. If not, I won't have a chance of being in the final," he added.
That Nadal has identified such an innocuous injury, given his creaky knees have been bothering his scampering play for years, as a potential key to winning his semi-final shows how aware he is that Federer may be playing as well as ever.
The 32-year-old Swiss had a terrible 2013, winning just one tournament and falling to sixth in the rankings.
He entered the Australian Open with his lowest seeding at a the season opening grand slam since 2002, when he was ranked 13th in the world.
Last year's performances allowed pundits to suggest the Swiss's time had come.
He had reached only one grand slam semi-final since claiming a 17th major title by beating Andy Murray at Wimbledon in 2012 and was losing more games to players outside the 'Big Four' than he had previously.
In the past 10 days at Melbourne Park, however, Federer has appeared to be close to his free flowing best, none more so in his fourth round victory over France's Jo-Wilfried Tsonga and then in Wednesday's quarter-final against Murray.
"It's an amazing result for me to be in the semis again. This one feels different because of the tougher times I've had in slams, Wimbledon, at the U.S. Open," the four time champion at Melbourne Park said.
Despite his blister, Nadal will enter the semi-final as the favourite having racked up an impressive 22-10 career record against Federer.
The Spaniard has won the last four times the pair have met and Nadal also triumphed in their Melbourne Park semi-final two years ago.
"He's been tough to play against, no doubt. I'm happy I get a chance to play him in a slam again. I don't remember the last time we played," Federer said.
"The head-to-head record is in his favour. I'm looking forward to speaking to (coach) Stefan (Edberg), because when we spoke together, when he came to Dubai and we spoke about the game, we clearly spoke about playing Rafa, as well.
"He thought he had some good ideas, so I'm looking forward to what he has to say."
Federer, who has been batting back retirement questions since 2009, said he was not going to be thinking too far ahead of his match against Nadal and felt that his age was tacitly lowering expectations upon him.
"Things don't get easier. But at the same time they might become more enjoyable (and)... maybe I can play with less pressure," he said.
"I still love competition. Still feel maybe there's something big around the corner,” he said.
"For me, it's (been) a dream run and I hope I can keep it up against Rafa," he added.
The 27-year-old Nadal has been forced to play the season opening grand slam with strapping across his left hand due to the sore, which is painful enough to compromise his aggressive style of play.