Glory me what a problem to sit with. I would suggest you hire a local interior designer to help you out with this problem. We could all give you some suggestions and ideas but ultimately you would need somebody to look at it, asses the structural set up and then take it from there.

That could make a great window seat. Are you sure you can't set up the room without blocking it? Why don't you post pics of the entire room and see if anyone has some good suggestions.

This is the opposite wall of the bay window. Off to the left of the fireplace are great big windows and patio doors to the lake, so I don't want the back of the couch away from the view!

very peculiar...did the real estate listing pictures give a hint as to what was going on? some sort of a portable heater? i'd rip the tile out and put in a window if possible. does it continue up to the loft?

The kids want to make it a climbing wall! LOL!

i'm not surprised a bit..

Could you place a low easy chair on the wall to the left of it & use the flat surface as a side table. I see this odd type window as being meant to bring in light from the 2nd floor down to the 1st floor. Does it do that?

Also add an orchid there to gain light.

Also its use would be great to bring warmth from the FP up to the 2nd floor. Function with form

replace the vertical tile with a vertical window, it would be stunning instead of quite frankly, horrible.

I would try the sofa below the painting to see if it blocks the fireplace too much. With a little modification that would make a great window seat with some wall mounted book shelves with down lighting for reading. I would be in there for hours!

I think you are right about putting another vertical window there instead of the tile. Thanks!

We are thinking about taking the tile down and making it look like a sofa table?!? Not sure there is a quick easy fix with it!

For a quick fix, paint the tile the same color as the wall. It won't get any wear as it would on a floor or in a bathroom. Or paint the vertical surfaces and leave the horizontal surface unpainted if you want to use it as a sofa table and are concerned about the paint wearing or chipping. Or could you just drywall over it?

https://www.sherwin-williams.com/property-facility-managers/education/styles-and-techniques/sw-article-pro-resuscitateold.html