After installing my battery replacement from iFixit, I had TouchID issues too. Couldn't be initialized or something. I would get the message repeatedly on the home screen, but couldn't set up TouchID in Settings. I even disassembled the phone again and followed the accepted answer on this thread regarding the proper order for reconnecting the screen and battery. It didn't help. I thought perhaps doing things in the wrong order prior had damaged something and TouchID was just never going to work on this phone again.
While troubleshooting a reboot issue with the same phone, I came across an article that suggested doing a settings reset. I tried that and it fixed the issue for me.
Go to Settings > General > Reset > Reset All Settings.
I hope that helps!