One way to hide the distance between the window and the rod is to add a roman shade up at the same level. It fools the eye into thinking the window is up there too, whether open or closed.

or even 1/3 of the way up for the roman shade and half way up for the drapery rod.

dont know what the item is thats on the wall but you'll probably want to go below it and be able to have the rod/drapes extend off the window 6-9"

Sooz001 and nnigrt - Great ideas! Thanks so much!!!