What happens when u atk with Injection fairy lilly and the other player plays magic cylinder?

Do u lose 2000 from payin and 3400 from the cylinder
or do u lose 400 lp from cylinder and u dont pay??

You lose 400 and don't pay 2000. Magic Cylinder activates in the Battle Step, IFL activates in the Damage Step, which is after the Battle Step. However, Magic Cylinder negates the attack, so you cannot reach the Damage Step.