I have been messing with this for quite some time now, I'm new to normal maps and so i"m sure there is an easy solution to this that I don't know/ can't find on the internet.
So basically my problem is when I bake out my normal maps, using Xnormal, they are made to fit my .obj without sub-patch on. The problem is I need sub-patch on to smooth out my low poly character but when I turn on sub-patch the normal map distorts in places of high contrast.
One work around I tried was to use my second subdivision level of geometry when creating my normal map. I figured that if I used the second level it would simulate my object being in a sub patch like state. This didn't work because in the second level there is more detail displayed without the need of a normal map, so when I put the new normal map on my character there was a loss of detail on the normal map.
How do you export out a normal map so there is no distortion while keeping quality of detail?
If XNormal (whatever it's) is not understanding sub-patches (if it's LW Modeler plugin that's no surprise, because sub-patches are not exposed in LWSDK), then you need to use ctrl-d (Freeze tool) before using that tool. Then bake normals, and redo freezing (or load original). Normals from frozen copy should match not-frozen sub-patch perfectly.