Australia progressed into the last eight of the tournament with a 1-1 draw against Bahrain, the point ensuring they topped their group at the continental championship.
They’ll next face either Syria, Saudi Arabia or Qatar in Bangkok on Sunday for a spot in the semi-finals.
With Olympic host nation Japan pre-qualified, Arnold’s team must either reach the final or win the third-place playoff to secure the Olyroos’ first Olympic place since 2008.
“I couldn’t be prouder of their work ethic, their desire,” Arnold said.
“They know what’s at stake, they’re not silly.
“We keep on driving the message to them that the opportunity to be at the Olympics is a once-in-a-lifetime chance.”
Tuesday’s draw with Bahrain ensured Arnold’s team came through their three group matches with a win and two draws.
Hot and humid conditions and a tight schedule meant Arnold rotated players heavily through all three matches.
A hip flexor injury means Germany-based Joshua Laws’ tournament is already over and he’ll be heading back home on Wednesday evening, while Melbourne City’s Denis Genreau missed the draw with Bahrain after injuring an ankle at training on Monday.
Arnold said it looked likely Genreau would also be unavailable for the remainder of the tournament, leaving Australia two down heading into the knockout stages.
“We’re waiting for Denis Genreau’s MRI today, it’s not looking great,” Arnold said.
“If he can play in the final, he’ll stay, if he can’t play in the final, he’ll be going home as well.”
The Olyroos will have the advantage of a day’s extra rest over their next opponents with Arnold promising he’ll be picking his strongest XI from now on.
“We have to put out and we will be putting out our strongest lineup from now on because it’s knockout,” he said.
“I know that in my brain. I know who that is. We’ll be ready for them in the quarters, whoever it is.”