Kenny Jackett admitted on Wednesday that he expected the 23-year-old to head for Oakwell on a six-month deal.
Wolves are eager to find Davis game time as he has slipped down the pecking order at Molineux.
He still has one year remaining on his current contract, so a short-term deal would suit all parties.
Barnsley have, however, pulled out of discussions and Jackett says there are no other clubs in the running.
He said in the Express and Star: “Nothing’s been agreed with Barnsley or ourselves and at present he’s still a Wolves player.
“Whether Barnsley will come back in the future, I don’t know.
“It was going to be a loan deal, but it’s down to terms rather than football.
“They did discuss a potential sale as well, after the loan, but the basis of it was a loan and terms haven’t been agreed.
“Dave is with us and training. There’s no other interest in him at the moment.”
Meanwhile, Jackett has expressed his frustration at learning that Togolese winger Razak Boukari has been ruled out for six weeks with a hamstring injury picked up in a pre-season friendly against Telford.
He added: “To lose him so early, we have to question ourselves really.
“It’s a hamstring injury that will possibly be six weeks, so did we do it right with him? Sometimes it’s bad luck but what we have to do is make sure it’s not preparation.
“From that point of view we’re always looking to do better. We’re disappointed because he’s quite a talented lad, but I haven’t had the opportunity of seeing him very much.
“Over the last two seasons, whether it be with us or out on loan, he’s hardly played any games.”