I like the placement of the top sketch: roughly 1/3 below the top window and 2/3 above the bottom window.

Thank you for the comments so far! There are no other windows in the room.

In addition to placement, any ideas on fabric? The fabric on our furniture is mostly gray and ivory but the wood/walls are more of a brown tone (Sherwin Williams latte). Should we lean more towards gray/ivory or beige?

Also since the chairs are patterned, should we stick with solid curtains?

Thank you!!

The room could use some color and softness. A large patterned floral would look great with your chairs. Pick any color you like as the rest of the room is neutral. Just be sure to bring home samples to be sure you like it in the space.

Hang the rod for the panels just over the bottom of the upper window. Add a roman shade (like a light woven matchstick) to the wall, and have it come down over the top of the lower windows. Hang panels on the sides to cover the edges. It will look like you have long beautiful windows.

I like your inspiration pic because it makes the upper window part of the arrangement and it's not hanging out all by itself up there looking undressed. Annie's example looks nice but the woodwork trim is what sets it apart and ties the two windows together.

Another idea, if you don't need to close the draperies for privacy, so the placement of the rod is less obvious:

Here's another Before (on left) and After (on right) showing the difference that raising the roman shades can make. Obviously I'm not suggesting this color, but rather something like a woven shade for texture. Also adding the panels will give you a nice finished look, and can probably be purchased inexpensively at a HomeGoods or online.

With roman shades, I do like it at the bottom of the upper window, but not with drapes...this looks funny to me: