If you like the tv where it is, remove the extra top framing. What is the budget for window treatments and for which windows?

Unfortunately the tv there is the only place we have to put it. It was on the wall left of the large window, but it was more of an eyesore when you walk into the house/room. It was the first thing you would see. So dropping the molding and enclosing tv is my best option.
The large window for now. Will change the kitchen shades later to something. Tight budget due to all the stuff we need to buy for the room and enclosing the tv.

On a tight budget with other things at higher priority, I would use four of the simple paper shades available for $5 each at Home Depot etc. for the bottom row of windows. They're good for at least a year before they get yellowed. If you want to spend a couple hundred dollars (and up) now, you could add a substantial rod and some simple white curtains. Two story high curtains and a big rod will cost far, far more. But do look on ebay etc. if you are interested in those because many people change their tall curtains and sell the older ones.

Not that tight of a budget. Maybe $100-$200 for windows. Thinking drapes going mid windows in a color like one of these... ?

Tables that I like, but don't know how to coordinate without doing the matchy-match look-which I don't want.

If you are keeping the wall color and the rug, choose a curtain color that blends with the wall or just plain white to go with the window trim. there is very little stackback space on either side of the window. Grommet curtains will stack back compactly, so will clip-on ring curtains.

You don't need anything next to the tv. Two tables with lamps next to the sofa would work. Not enough room for a coffee table in front of the sectional. Buy lamps and tables that make you smile when you first see them. Ho hum tables are fine if they are $10 at a garage sale, but not if you are paying $100 or more each. Two tables and lamps that match each other are just fine, that would not be overly matchy matchy. A light blue lamp that coordinates with the blue in the rub would be a subtle touch of color.

There may be room for art on the diagonal wall next to the window. Tack up some newspaper to see what size, once you get the long curtain rod put up. Try 24 by 36 inches, poster size, for dramatic impact.

The last photo you uploaded shows a good versatile pair of nested tables with graceful understated style.

This search will get you some nice lamps by Uttermost. https://www.houzz.com/products/blue-table-lamps-prbr2-br~t_611~a_77-582--1268--1?fi=36

Hey Hily P. First of all, beautiful home. I would recommend a plant in the corner to the right of the fireplace, or on either side in that matter. I have an avocado tree in my living room and it really adds some color, life and dimension. Usually makes for a nice little conversation piece too. You could maybe try something unique and tropical like a mango or lemon tree. Lighting can be a bit tricky so I use the Aspect grow light since it blends well with my decor and uses a warm white light. Again, beautiful home and best of luck!

You do have a lovely room here even though it has some decorating challenges. I agree that the mouldings above the fireplace should go. If you enclose the TV I recommend adding cabinets on other side of the fireplace to complete the wall and keep your eye from travelling up to the empty space above. I like simple draperies in a creamy color. You could use panels instead of full draperies to save money but, because your room is quite formal, I would hang them in the traditional manner rather than gathered on a rod. You can get these readymade. You can get short rods rather than having one that goes all the way across. For privacy and light control you can get blinds that fit inside the window frames. I like the nesting tables and the lamp pictured above. You don't have a lot of wall space for artwork. You can use open shelving on the cabinets for displaying favorite pieces. Keep it simple and elegant.

Would something like this work? Pretending the fireplace frame is gone, tv cabinet actually matches mantle color and the pics above cabinets aren't photos but artwork.

Or would built ins work better?

I think the cabinets should be the same height as the TV cabinet so it looks more like one unit.Make sure the colour is the same for all cabinetry. I like cabinets with some open shelving so you can display special items, including artwork. You can make premade cabinets look built in. If the budget allows, built in are better. I would check with a carpenter.

I personally would like the side cabinets the same height as the mantel. Any taller will look out of proportion and put art work like you pictured...looks nice IMO.

Anyone know how hard it is to remove fireplace top frame? Or who would you call to do that type of thing-thinking it will be a lot of plaster and paint fixing afterwards

The wall on each side of the fireplace seems very narrow..not sure what kind of cabinets you would be able to get..Have you thought of getting a nice cabinet for the wall on angle? Maybe you can find something nice that would fit the tv. When not in use, you can close the cabinet and the tv is out of sight

In this photo, you can see the tv at an angle,,not the same thing as you have, but you could do something similar, but with a nicer piece of furniture. I found it here where you can see other ideas as well http://www.homedit.com/corner-tv-placements/

Or have it this way

Side wall you wouldn't be able to see as well. Also think a tv cabinet that close to sofa would overcrowd the are too-but nice thought. :)
Once we somehow get the top frame removed from around tv, I think we will get something very close to this around the tv.
Now to just figure out what to do next to the fireplace. I feel it needs something like cabinets or built ins, but just don't know.

I would separate the lounge chair from sofa if you can, to give the room a little more flow. I did it for one of my clients, it change the whole room. See picture!

No built ins; they'll be way too narrow. I'd do top down/bottom up shades instead of curtains since you have no space to stack them.

The cover looks nice..You could use do one of these 'art' covers http://www.tvcoverups.com/

As for the windows, if you like the cellular shades, you can find them at decent prices.