Electronic – Altera DE2 interfacing with analog sensor

I think there is no definitive answer here and you should consider every one and pick the best of all.

Why? This is common, when one talks about ground loops, return currents, or just proper grounding to get tons of replies that come up with completely different conclusions. They all have good technical arguments. All will explain that they have done so or so thousands of time and that it solved the problem all the time... Well, probably they are right and this is true.

BUT

Proper grounding is dependent of the application. Good practices in analog design are disastrous in high speed digital. RF grounind has nothing to do with high power DC grounding. Then comes the argument of safety ground (Earth) and ESD/EMC/EMI issues. For instance, there is a good book about the subject "Electromagnetic Compatibility Engineering" by Henry Ott, which is very good. But good at what? The book is oriented towards EMC/EMI. It doesn't address (or at least not thoroughly) proper grounding for audio for instance.

This doesn't answer your problem alone, but combined with the other answer you will get, it may help a little bit.

In order to contribute more to the final answer I would say that: What defines if your solution is correct or not? In your case it's if the amount of noise you get at the input of your ADC, relative to AGND at the ADC pin, is lower than the resolution of that ADC. Thus we need to know the amplitude of your input signal and the requirement in term of noise.

The PING Ultrasonic Range sensor will emit a pulse on the 5V signal line that corresponds to the amount of time between emitting a 40kHz ultrasonic pulse and receiving the echo of that pulse. When the sensor emits the pulse, its 5V SIG line will be set to a logic high (5V), and when the echo is received, the line will go low again. Your goal is to measure how long the SIG line is high and perform a calculation to convert that time to distance.

You can connect it to your GPIO. There is no need for an ADC, because the sensor output is a digital signal. It will either be high or low. My HDL programming is a bit rusty so I won't try to give you a code sample, but essentially you need to create some logic that monitors the GPIO your sensor is connected to and measure the time between the signal going high and when it goes low again. Then, use the test data from the manual here to make the proper conversion from time to distance.

As was pointed out in the comments, you probably don't want to connect it directly to the GPIO. You may need to put some resistors in between the sensor and the GPIO, but the datasheet for your board or chip should tell you that.