Yes. its connected to the motor driver, but powered from the uno. Standard when using 2 motors with that motor driver.
So should I increase the power output?put in more than 3 AA batteries?
Not at all.
The driver allows different power supplies for different motors connected to it.
If you want to drive both motors, you need to power both parts of the circuit.
Who said one of those needs to be powered from the Arduino ?
The on board power supply can power the board and some small current parts.
Motors (including servos) are hardly small current parts.
So power all of them without the use of the on board Arduino regulator, and you'll be fine.