IMHO, the best would be to create a flat surface and to create the desired text (as draft offset or protrusion). What is important is the lenght of that surface, and it should be D*pi, where D is diameter of the cylinder.
In the next step bend this surface around the cylinder with the torodialbend command, and that should be it
Engraving is easy. You just protrude a rectagular block its lenth is exactly equal to the circumference of the cylinder. Go for solid>cut>extrude> then go for TEXT in sketch mode. Now you are seeing the rectagular block in which text is engraved ok. then go for toroidal bend.