i would do hard wood and area rugs. can the drop cieling come off? or is that acoustic tile? i would box in that metal beam. put in some wall sconces. turn the couch so it faces the opposite wall and have it start where the stair case wall ends. then put the tread mill around the corner out of eye shot. but you can still watch tv while you work out. how deep is that bump out? i would consider some built ins along the long wall for toys and such maybe with a bench top. a light greige would be really nice. this is very crude but here is the idea.