I'm on the same project personally...I using 2 battery... this part should work between 3.3 V and 5V...
finally with 2XAA we only have 3V, and the max value for me is 750 not 1023... did you get 1023 when into the water?
If you have the XD-28 sensor, I think air is about 1023 (so minimal connection). If you put it in water it will be much lower, 300 to 400. 100% water isn't realistic of course and because of that, I get my first reading with the sensor in the air and the second one I initiate with a button press when it's planted and the spot is fully watered.
The button press is just a way to get the different readings for different soil. It does actually read the sensor 200 times and takes a median of that and set the "0" point after that.
I'm trying to measure the centibar which is (apparently, I did not know this a week ago) the right way to measure the soil. Of course, soil temperature has something to do with it also. I'm working on that at the moment.