Penn State's second-half comeback bid fell agonizingly short in the game's final minutes.
Jess Mruzik's 21 kills and outstanding defensive showing elevated the Nittany Lions to the third round.
Wallace was questionable in last week's game against Maryland and Washington has missed the last two weeks due to an injury.
Penn State remains undefeated in conference play.
Penn State suffered through miscues on both sides of the ball to drop its second consecutive game.
