Need help to cut specific grooove in cylinder

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Hello. I'm trying to cut "half-circle" shaped groove, within cylinder.
Here is an example of that groove, cut in block:
Sweep circle along desired path
Cut it from block
But i need initial path to be "wrapped" around cylinder, like this:
Once I try to sweep circle along path "wrapped" around circle, it complains to self-intersection.
Any ideas are appreciated - how do I get exactly same groove as i got in block, cut from cylinder?
I've tryed also to unfold sheet-metal from cylinder to plane, cut my groove and re-fold it back. But during re-fold, groove distorts too much.
Also i've attached my faulty flow screencast, just in case it helps to understand what i'm trying to achieve.
Resulting body tends to be used in mechanism, like in this click pen:
Thanks.