As I recall, again from reading Spivak some 35 years ago, Gaussian curvature of a surface at a point p, may be defined as the product of the curvature of the two (perpendicular) curves through p having respectively maximum and minimum curvature as curves. So for a cylinder, you are right that the curve of maximal curvature through the point is a circle of positive curvature, but the curve through the point with minimum curvature is a line with curvature zero, so the product, the curvature of the surface, is zero. Intuitively this is true because the cylinder can be flattened out without tearing it, so really it is not curved as a surface.
I do not know what intrinsic and extrinsic curvature mean but i can guess. Curvatiure is determined by a way of emasuring lengths i.e. a "metric". If a surface like a doughnut for instance is embedded in three space then there are many ways to define a length on it. There is the "extrinsic length" which is just the restriction to the doughnut of the notion of euclidean length. The associated curvatuire would be the extrinsic curvature. E.g. it was extrinsic curvature we were discussing above for the cylinder.
But it seems intuitively clear to me that we could define length differently, in a such a way that the length on (the surface of) a doughnut agreed with the extrinsic length on a cylinder and then the curvature of a doughnut surface would be zero.
So really all curvature is intrinsic, since it is determined by the metric, but you may call the metric and the associated curvature extrinsic if ity happens to agree with that of the embedding space. This is just a plausible guess, but not an uninformed one.