Ruud, a clay court specialist, said he had been nursing a minor injury in his left knee for some weeks that had carried throughout the clay season and restricted his movements against Borges.
"Hopefully it is nothing too serious, but for the last couple of weeks I've been struggling with knee pain," Ruud told a press conference.
"In practice, it is easier to avoid certain movements, certain shots. But when you play matches, you can't control it the same way.
"Sometimes you kind of forget that this is a shot I shouldn't go for, maybe in terms of pain in the knee. I still played good tennis in the first two sets," he said. "It's a Slam, I didn't want to retire."
The world number eight initially looked to be cruising to an easy win when he bagged the first set 6-2 in 41 minutes.
The 28-year-old Borges, however, roared back, cutting down on errors and sharply increasing his points won on his first and second serve while breaking the seventh seed once.
The world number 41 then steamrolled through the third set courtesy of two back-to-back breaks early on that put him 4-0 up.
Ruud took a brief medical time-out after the third set, hoping treatment would improve his kne,e but it did not help.
Borges showed no mercy, powering through the fourth set to finish off the 26-year-old with a bagel.
The Portuguese will play Alexei Popyrin in round three after the Australian eased past Alejandro Tabilo of Chile in straight sets.