People interested in the possibility of life outside of earth spend a lot of time thinking about liquid water. Compared to the other requirements of Earth life, such as energy sources and complex organic chemistry, liquid water is very rare in the solar system. Moreover, in terrestrial life, liquid water is chemicallly involved in the synthesis of the building block molecules DNA, RNA, and proteins, and helps transport nutrients and wash away wastes.
This focus on liquid water is the reason for the magnesium sulfate geology work on Mars, and the attention to possible ice volcanoes on Titan.
I should emphasize out that Mars is VERY dry, and Titan VERY cold, so the evidence for liquid water in both locations should be viewed with the perspective that we're still talking about conditions more extreme than seen anywhere on Earth.
But how dry is too dry? Scientists have thought the absolute desert region of the Atacama desert in Chile, which receives rain as infrequently as once a decade, to be devoid of life (subscription to Science required). Now a team led by RM Maier at the University of Arizona has successfully cultured bacteria from subsurface samples in even these extremely dry regions. The authors speculate that they may have managed to find these bacteria by digging about 20 cm deeper than prior investigators.
The Viking missions to Mars in the middle seventies tried to look for life by a couple of means, but found only oxides in the surface soil. Oxides are rapidly destroyed by water, suggesting the complete absence of water in the soils tested by the Viking landers. This oxide chemistry was also found in the surface soils in the Atacama desert(see the Science link). Thus, the potential significance of the new Atacama desert findings are that even when surface soils show extreme dessication, nevertheless living things can be hanging on just a little bit deeper.
So, with the caveat that Mars conditions are still more extreme than seen even in the Atacama, we can say that we don't yet know how dry is too dry. Let's keep looking!