Can tarlov cyst cause severe pain, and permanent nerve damage?

Yes: The majority of tarlov cysts are found incidentally when looking for other things--ie, they are asymptomatic. That being said, tarlov cysts can compress the nerves adjacent to them causing sometimes significant dysfunction.

Normally no: These are usually incidental findings when an MRI is done of the lumbar spine. They are often well below the nerves that would cause back or leg pain. A spine specialist could help explain this further and help with your diagnosis.