You've got the right idea. If you can rehome the glider rocker and small rug then pull the other two chairs up to the big rug and be included in the main seating area. How much space does that leave by the window?

It's too cluttered. Throw out everything that's not, absolutely, necessary.

What's the focal point of this space?..

I realize everything has its purpose but, is it necessary?

I'd change the ceiling fan & invest in some window curtains.

You could also move the loveseat to another space and put the chairs on each side of the couch, facing one another. Frees up space.

Andrea, what do you think of this layout?

It's a nice space, with a lot of light, but I think the bookshelves need work (perhaps some more books) with a lot of small, haphazardly placed items there. I would also declutter the fireplace, and try placing the mirror vertically. The lamp at one end of the couch seems much too short, more like something you'd have in a bedroom. Even now your room has a welcoming vibe that I like.

You are welcome! Hope it works! I'm always rearranging furniture. My husband says he's going to put wheels on them :-0