Obviously a large issue is WHAT makes up their two armies. Malgus has Sith, so that could prove a major threat. Obviously Jedi have been killed by the Droid Army before, but with thousands of Sith running around... it could be an issue. That being said, the diversity and technology shown by the Droid Army is full of surprises and nasty little tricks that could easily throw the Sith off-guard.
Also, although Malgus made allies with aliens and other groups, Grievous's power base consists of the entire Separatist movement.
I'm going to give it to Grevious, for his endless army that would far outnumber (and therefor out-gun) Malgus's.
I dont remember their being thousands of actual sith with lightsabers backing Malgus...