It is a vinyl window? It can be tiled in. If not, probably need to swap out window for vinyl of glass block.

I need help with a master bath at the showroom Laura...

This is totally doable. To have a successful result, the flashing has to be properly done or you will invite problems that will cost a lot to fix later. The window will most likely come out to do this. Your carpenter should work in conjunction with the tile man. The key is keeping the water in the shower and not in your wall where mold and rot will happen.

I would be a bit scared of taking the window out of a brick wall as you cannot get one back in with a nailing fin and properly flash everything back. To keep the window in a shower though, it should be a vinyl product (inside and out, not a vinyl clad window). Extra precautions should be taken to thoroughly waterproof the interior areas. One of our clients has a shower with a window such as this and it faces the street and the driveway. On the exterior of the house, double shutters were installed to cover the lower section of the window (not the arch). While I have not attempted to open them, they appear to be fixed where they can't be opened - at least not easily.

Good luck.

I was not talking about removing the frame from the house. I should have said remove the sash from the frame below the arch. Flashing the sill inside and outside. Installing a vinyl replacement product in the hole. Pre-sloping the substrate for the tile, waterproofing and then finish work.

So, I'm pretty sure the window is not vynal. It sounds metal when I tap on it. The total plan is wanting to take out the shower and create a linen closet, remove the tub, and create a large shower. We do not want to remove the window. Tiling the entire wall is interesting. I know that would require removal of existing drywall, but waterproofing the window is a much better solution than removal which is not an option. Leaving the vanity where it is also is not negotiable. We do not have an unlimited budget.

Seeing how deep the jamb is, I think you could do a hybrid of a couple of the ideas here. Build your linen closet for the left wall, lay out and waterproof the pan with Schluter Kerdi or a similar system. The window wall can be left as drywall if you're using Kerdi as the waterproofing membrane. In the larger jamb opening (looks like 8-9" larger than the window on each side), glass block the niche in flush to the surrounding wall and up as high as the circle top. The window stays, the natural light comes in, it's waterproof, and with the shade left intact it won't look any different from the street.