@michfan - the way the rain sensor works is that it is normally closed which allows the current to go to the master valve. When it rains, the rain sensor opens the circuit so no current will flow to the master valve. If the rain sensor is still wet and Rachio thinks it needs to water, Rachio will think it watered when it really didn't. Plus, there is no way to manually run the system when the rain sensor is tripped. I see three options:
Remove the rain sensor from the master valve circuit and just depend on the weather station/forecast - the sprinklers could go off when it is raining at home, but not at the selected weather station. Be sure to use water tight wire nuts to keep moisture out of the connection if the connection is outside or underground. (Second best option).
Remove the rain sensor from the master valve circuit and wire it to the Rachio sensor terminals. (see above note on wire nuts). There is the opportunity to move the rain sensor closer to the Rachio device now that it is disconnected from the master valve wire - if that is desired. (Best option - IMHO).
Leave the rain sensor in line with the master valve circuit, but live the issues of Rachio thinking it watered when it really didn't and not being able to manually run the system when you want to. If the rain sensor is attached to the Rachio sensor ports the scheduled runs won't start, but a manual run will work.