I am a bit confused. You first say it is a formal living area and then you mention curling up and reading a book. Are you wanting this space more casual or formal?

This would look nice, with the bookshelf on the wall where your sofa is currently. https://www.houzz.com/photos/living-room-ideas-phbr0-bp~t_718?fi=8

I absolutely adore window seating! You're so lucky to have that window :)

I wouldn't use a window seat. I feel the view is too nice to block. It would cover part of the lower half. I would place a sofa floating in the room opposite the window. Add two chairs on each side of the sofa. Coffee table. End tables for each chair. Large bookcase on the wall where the sofa is now.

I think the space (wall space below the window) will not accommodate a window seat. I like the bay window open and spacious. People don't really "lounge" on a window seat. I love the chair but would sell the loveseat. How about a backless chaise for the bay window? You can lounge and read a book there, then the chair and lamp where the loveseat is? I'd keep it very open and spacious feeling. I'd paint the walls a warmer color as well.

How come I can't post sample rooms from Houzz? I used to "open in a new window" then copy paste and it won't let me anymore. Tips? Thanks!

Something wrong with computer? I think

The wall where the sofa is has a bit of a recess so it would be perfect for a wall of built-in bookshelves for books and display purposes. Opposite the bay window I'd have a 3 seater sofa facing the window with a sofa table behind it. I'd use a glass-topped coffee table to keep the room light and airy. In the bay window I'd use a chaise lounge as Darzy suggested. I would choose one with a low back and a single arm though to make it more comfortable for reading.

In between the sofa and chaise on the side facing the bookshelves I'd put two low backed chairs with an occasional table between them. The current chair you have is nice but the back is too high. The window should be the focal point and that chair doesn't allow for that. Unfortunately I don't think your current furniture is right for this room.

Pella Doors and Windows has custom bay windows in Wood, Fiberglass and Vinyl. I have attached a few pictures that I think would work in your space. Good Luck!

UNDER NO CIRCUMSTANCE anyone should be allowed to call a window monstrous or a problem. If this room is not the main living room, make it what it wants to be. get 2 lovely armchairs with ottomans, a great side table and place them in front of the window. add a pretty desk where your sofa is. add some bookcases and place the sofa in the wall opposite the desk, floating it. Voila! you have a lovely library.
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