For the LM35, use the more stable internal reference for the analog port - more details here. This will improve resolution and overall stability a lot.
There's a chance your water sensor messes up the readings by affecting Vcc, though this shouldn't happen if used correctly. Do mind that you should not leave this sensor powered on - best to completely disconnect it when not in use, as otherwise it will corrode away within weeks as the copper is in contact with the water.
Another potential issue with this water sensor is ground loops as you make direct contact with the water. I don't know if the LM35 is susceptible to this.
I see you try to do an analog reading on that sensor: this won't work reliably. A small change in the mineral content of your water will totally mess up your level readings. It's only really suitable for digital (water/no water) readings.
Other than that no obvious issues.
OP's circuit diagram:
