Ideally the front legs of all the furniture should sit on the rug...Optimally all the legs should sit on the rug., but that probably requires a bigger budget. You might consider updating your window treatments.

I would suggest a round rug for your room, with just the front legs of the furniture sitting on the rug. I'll try to find a few examples for you.
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You have very traditional furniture in neutral colors so I'd be tempted to get an oriental rug, rectangular and large enough for at least all of the front legs of the furniture to go on the rug (and ideally large enough for most of them to sit entirely on the rug). I'd stay with your neutral palette as a background or dominant color for the rug with some pretty accent colors in it. I can't quite pin down the color of your sofa and chair set. Is it a taupe? Does it lean more toward gray or brown? Photos can be deceiving.

I like the colors in the rug Carolyn selected. It looks like it will work with your furniture and wall color in the dining room. To lighten the space, I think a larger rug that can fit all of your furniture would be ideal.

Your furniture is very formal, I agree with Carolyn and Manon; the rug needs to lighten the space and be large.

I got a light toned animal print from Stanton carpets that I love! It really lightened up my dark den...you can have it custom sized...Best to have all legs on the rug, the space will look, feel and be bigger!

I very much like Carolyn's choice, I just wish the colors were a bit brighter.

I don't think all the legs need be on the rug in the living room. But in the dining room, the legs definitely need to be on the rug when the chairs are pushed up to the table, unoccupied. A 9 x 12' rug
works well in most dining rooms with a rectangular table. Some say the dining room rug should come within 2 feet of the wall at both ends, but I believe that imperative comes with some ifs, ands, and buts.

Thanks for the suggestions everyone. Olldbobbi - Thanks for the examples. I had not considered round. I guess because I feel the furniture should sit on the rug and it is arranged in a retangular shape. Feeny - the chaise and loveseat are a dark olive green. The armchair is actually striped with dark olive green, taupe, burnt orange. I have attached more pictures of the fabric. I was thinking of a neutral background with some accent color also, maybe a pattern because there is a lot of solids in the room. Leigh - what window treatments would you suggest. We live in a wooded area off the road so I don't need privacy but the evening sun comes in the side windows and I'm afraid it will fade the floor and furniture. That is why I have added the sheer. Thanks again.

Well, I ended up buying this rug. Not what most suggested, but when I was shopping it caught my eye and although my house is mostly traditional I am trying to change the style a little. I wasn't sure about it at first, but it's growing on me. Hope it didn't break all the decorating rules. I am now changing my curtains like suggested. I cut them in half and hung on a rod. Now I am trying to determine what length to hem them. Right now I just have them folded over at the top to a length I think I like. I also am thinking of removing the fringe. I have folded it out of sight on the right panel and left it exposed on the left panel. What do you think?

I love the rug, great choice! Re the draperies, I prefer having them just kissing the floor. Puddling them is a look from the past.

Thanks Carolyn for bolstering my confidence in my rug choice. :) I will shorten the drapes a couple inches. Do you think I should remove the fringe?

Yes, sorry I forgot that question. Please remove the fringe.

Thanks. That's what I was thinking, but it's nice to have a second opinion.