England's Lee Westwood is alone in fourth at 8-under-par 136. Stephen Gallacher of Scotland and Australia's Nick O'Hern followed at 7-under-par 137.
Sjoland, a two-time winner on the European Tour, began the day three shots off the pace at the Forest of Arden and rocketed out of the gate with a birdie at the 10th, his first.
The Swede added a birdie at the par-5 12th and ran off back-to-back birdies starting at the par-4 16th to jump to 7 under.
Sjoland, who went through the opening round without dropping a shot on Thursday, converted a 10-foot putt for a birdie at the third and made it two in a row with a birdie at the very next hole.
The 32-year-old pitched his third shot to 6 feet and saved par at the par-4 sixth to keep his bogey-free streak alive. Sjoland then birdied the par-3 eighth to secure the outright lead heading into the weekend.
'I think I am more focused on the course now,' said Sjoland. 'I think I have been hitting the ball pretty well this year and not making too many mistakes.'
Romero was steamrolling into the clubhouse with the lead after four birdies over his first 12 holes lifted him to 9 under.
The Argentine then dropped his third inside 12 feet for a birdie at the 17th and birdied the last to move to 11 under.
Romero's round was far from over, however. Before signing his scorecard, Romero met with officials to discuss his play on the 14th green.
The 49-year-old left his putt a few inches short of the hole and upon addressing the ball to tap it in, Romero paused as the ball seemed to move. Romero briefly discussed the situation with his playing partners and ultimately tapped in.
After the round, Romero was told that he would be penalized two strokes: one because the ball moved and a second because he failed to replace his ball after it moved.
In the end, Romero was able to reflect on the situation.
'I am very sad about what happened because I played really well today and actually shot 66 but rules are rules and they are the same for everybody,' said Romero, who carded a 68 on Friday after the penalty. 'I made a mistake and it was my fault.'
Davis played the back side first and collected three birdies and a bogey over his first five holes.
The Englishman added a birdie at the first and another at the third before stumbling to a double bogey at the par-4 sixth.
Davis responded at the following hole and hit his second shot to 9 feet at the par-5 seventh. He drained the eagle putt and added a birdie at the last to complete a round of 67.
'To finish like that was great,' said Davis. 'If I'd made double on the last or something and not eagled the seventh, I could have gone from the lead just to hanging on to make the cut, so it was important.'
Michael Campbell, Angel Cabrera, Santiago Luna and Jean-Francois Lucquin share seventh place at 6-under-par 138
The 36-hole cut fell at even-par 144 with 75 players qualifying for the weekend including defending champion Greg Owen, who fell on the number after his second straight round of 72.
Among those who will not play the weekend are Jose Maria Olazabal, Ignacio Garrido and Gregory Havret.