Hi. It not really possible to get a normalmap without wavyness with such lowpoly cylinder. But there are some workarounds. This is what I do in the cases when its possible to apply it: Make the lowpoly, and duplicate it. Instead of adding support loops and subdivision modifier, use chamfers so the circular segmentation…
This could be the lowpoly affecting the AO casting... try setting the lowpoly to not cast shadows. http://wiki.polycount.com/AmbientOcclusionMap#Object_Properties_Method