Oliver was admitted to hospital earlier this week due to an infected blister, with the Demons star subjected to an IV drip and antibiotics as he battled with the setback.
The Melbourne midfielder was initially in line to return from a hamstring strain that kept him sidelined for two matches, with the Demons having hoped to have their contested ball winner fit and firing for a blockbuster clash against ladder leaders Collingwood for the King's Birthday match.
Melbourne coach Simon Goodwin confirmed on Friday the club has ruled Oliver out of a return for Round 13, with the 25-year-old still in hospital three days out from the game and is expected to remain in hospital until Sunday.
“He's definitely not playing,” Goodwin said.
“He's still in hospital with an infected foot. It was pretty serious at the time, the infection, so he's had five days in hospital and he's probably not looking like he'll be out until Sunday.
“We just need to make sure that this infection gets under control.
“It's all pretty positive…we're pretty hopeful that once he gets through that period it'll be a pretty fast transition back.”
Melbourne will make at least one change for Monday's clash, with defender Jake Bowey sidelined due to concussion. Veteran backman Michael Hibberd is expected to take Bowey's place in the side after being managed for last week's game against Carlton.
Monday's clash will see star recruit Brodie Grundy face his former side for the first time since moving from Collingwood, with the Demons ruckman set to go head-to-head with close mate Mason Cox in the middle.
Goodwin said while Grundy is feeling "relaxed" ahead of the match he has a point to prove when coming up against Collingwood.
"He's looking forward to it. I know that much. He's keen," Goodwin said of the two-time Copeland Trophy winner. "He's obviously put a power of work through the summer and he's now at a club that really values what he brings to his team.
"We are certainly going to embrace that. He's obviously playing against his old team, he's got some mates and he's pretty close to Mason I think. There's going to be a pretty good battle in there and he's looking forward to it.
"I think whenever you play your old club there's a little bit of a point to prove. As I said, he's coming into a club that really values what he brings to the team. He wants to put that on show. He wants to do well in the ruck, he wants to compete well, he wants to win the ground ball and really propel our team forward. We value that from Brodie and as I said, he is now at a club that does value that."
Goodwin flagged young midfield-forward Taj Woewodin is a week closer to making his AFL debut after a strong run of form in the VFL, while veteran forward Ben Brown is needing to find more consistent form before earning a return.
The Demons and Magpies will confirm their squads for the King's Birthday encounter at 6:20pm (AEST) on Sunday night.