Try fabric roman shades on the windows, mounted inside the frames. Then add a decorative rod outside the recess with fixed panels on each side, exposing a bit more of the windows. Add an upholstered storage bench below the windows. Picture #1 isn't recessed and #2 is a bay but they give you the idea. The clock and plant may need to be moved if the drapes hang outside the recess as they will cover part of the wall. If you'd care to comment and then attach images of the rest of the room we can tweak a little bit.