I actually like it... :) looks tidier.

There is nothing in the corner...it was an extension on the house in that section. I think it may actually be the old brick underneath. Because of the fun things we found in the house we actually had to redo the ductwork through the entire house, so to bring it to current code there will be a bulkhead along the entire long wall of the living room (behind the sofa) so I feel like with the pelmet over the window it may be a bit much. I was also thinking that it may be a bit old fashioned, I just wanted to hear some advice on if they really are out of fashion.
So thank you both!!

Sounds like a big project!! Exciting! From what you describe of your plans, I don't see how that bulkhead will fit in. I recommend taking it down.

Looks like a modern vibe you want. I would change out the cushions to a combination of grey and beige oversize, feather types. Valances are not in but look at modern curtain rods. A darker floor would be nice if you're willing.

None of the furniture is ours. This is a pic of the staged home before we got into renos. The floor was already updated to a darker colour. Preverco Samoa in Hard Maple, which has some lovely grey undertones.
That being said...we seriously need some furniture! Any suggestions of what could work in the space would be appreciated!

Will post a new photo when I have a ceiling again!!