You really can't ignore the fireplace because it is placed in such a prominent position and is really decorated up. Do you watch TV from the sofa? Have you tried to angle some of the furniture in front of the fireplace?
I would like to see you mix the blue and the taupe up instead of having them together. A bit too pat, I think.
You have nice space. Have you tried to move the sofas in front of the fireplace and placed the chairs and the credenza where they sofas are now? You would make two seating areas. Just an idea.

Leelee - I have tried all three ways lol! This is the arrangement that family, who come over often, not to mention my husband, prefers the best they said. I still just feel like something is off and it bugs me everyday. The lengthwise rug idea, we actually started off with in the beginning worked, except I felt like the tv and fireplace should both be opened up to the large sofa and table.
Bar stools are a big loss for me because I have the perfect ones picked out :(
Another thing, if the rug does run lengthwise, there is more room for them. Ugh!

Baveld - I have tried angling the furniture, and it just wasted the ample space in the room. It made the room look smaller.
The credenza has to stay because that wall has already been wired specifically for the tv by the builder.

Wonderful room! It is large, yet your furniture is bunched up and uncomfortable. Turn the rug lengthwise. Move the love seat down towards the tv, it does not have to be centered on the windows. Likewise, move the chairs and side table down and spread them out.

The coffee table is rectangular? Turn it sideways too, move the chairs and end table in, and you may have enough room for barstools. You may have to switch the sofa and love seat to make it work.

Given what you have stated I would change the decor of the fireplace to make it not so prominent in the room. It's the very quiet gorilla in the room. It's pulling at me when I look at your photos. it wants to be a focus but its not. Do you see what I mean? I would still like to see the blue and the taupe changed up a bit. It's a bit boring. But, I love love your chairs. Can you change the run to pull in more of the blue? And how about a third color for pop? Like orange? Yellow? tapestry?

Your rug just disappears into the floor. Maybe the rug could go into another room and you could look for one with more contrast.

A glass top coffee table or one with lighter wood might replace the dark and heavy looking one.

That's another question as well...
What's the focal point? I thought it was always the fireplace. And I love it so much that I don't wanna hide it.
I think everything will be balanced as soon as I get my chandelier, more wall decor for the short wall, and maybe even a plant or floor lamp? I will turn the rug around again and see.

Leelee - I told my husband we need to replace the rug with a huge area rug that can be custom cut to fit the room. That way everyone is playing together. I feel like the credenza has been kicked out because of the space between it and the rug. Unless I put two zebra ottomans, which I would love.

I like what sootsprite mentioned about moving the whole arrangement toward the fireplace and TV. It seems so far away that viewing the TV wouldn't work. That might also free up the space to add your bar stools.

vshanar, you know all the open concept and angles especially with fireplaces make decorating difficult. You have a lovely home with great furniture so it's not your fault. Where are the zebra ottomans? Can you bring those into the equation?

how about a different color paint (dark/accent) on the fireplace wall only? That would help draw your attention to the fireplace. I think another thing I would do is have a good carpenter build a frame/box type thingy I've been seeing to hide the tv when not in use, cover it with artwork... or switch the credenza for one with the hidden pop-up tv. All kinds of great examples on Houzz!

Also, does the light fixture have to be centered over the coffee table? Cause I feel like no matter where the furniture is placed, it never looks centered over the furniture space properly.

You don't need to center the fan/light on anything. Don't even look at it! :-)

Consider switching out the fan to a white one that will fade into the ceiling.

Definitely want a chandelier from restoration hardware ;)

Should I replace the panels above the mantel with a mirror?
What shape?

If you would like to add more color to the space, I would get a large painting. If you want to stay neutral, look for a mirror with interest like this gothic motif:
http://houzz.com/photos/9294131
Try a mirror on top the mantle first to see if you like what it reflects.