Steele posted an 11-under halfway total to head a group of four that includes Jhonattan Vegas, who stumbled with a bogey at the par-five 18th after taking four strokes from 60 yards.
The Venezuelan (71) slipped back to nine-under with Canadian Graham DeLaet (68) and Americans Will Wilcox (67) and Harold Varner (70).
Englishman Justin Rose (69) was among a group three strokes behind, while McIlroy was six shots off the pace after shooting a 71 that included just two birdies.
McIlroy collected both of his birdies with mid-range putts but frittered away a few golden opportunities, including putts of three and five feet.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
McIlroy said he had yet to find his touch on the greens since returning from an ankle injury at the PGA Championship in August.
“Very frustrating,” said the four-times major champion. “It’s been like this since I came back. I need to figure it out a little bit. I just need to see some putts going in the hole.
“I think it’s more mental than anything else. Whenever you don’t see anything go in, it makes it harder and harder each and every hole that goes by.
“So hopefully (I) find something on the putting green tonight and then if I can get off to a good start in terms of holing putts tomorrow, hopefully that can feed through ... and I can go from there.”
Leader Steele, whose lone victory came at the 2011 Texas Open, is coming off a solid season in which he posted a runner-up finish at his home event, the Humana Classic, a tie for 12th at the PGA Championship and finished 50th in the FedEx Cup standings.
(Reporting by Andrew Both in Cary, North Carolina; Editing by Peter Rutherford)
