And sorry about typos “in-laws” not inlanders. (LOL)

Depends on your budget. Personally, I'd paint the paneling, but that's me. Can you combine any of these items? There is furniture that is multi-function, so you may want to look into that. I like more space than stuff, so I would try to either combine pieces or do without. Are you taking full advantage of your vertical space - can you put tall bookcases in here? If you are afraid of them falling over, you can always have them secured to the wall.

Live in a cold climate, so that you use a fireplace? could be converted to electric, with shelves above....

How many sleep there - what size bed, and would a murphy style work - with shelves in it?

We have the same paneling with shutters. I bought this type brown-grey finish which looks nice [and nice with light walls too].

I placed a woods/sea canvas above sofa, and it seems to fit with paneling. The tv is dark anyway [and dark unit].... so I added teal-brown vase, etc...for a retro-natural room.

Nebula Full Wall Bed, Bark Gray · More Info

I would look for a Murphy bed, even though you would need to cover a window. Another option is a futon or sleeper sofa, although they are not as comfortable. You might also consider using a blowup mattress when needed to give you the most space when you don't have company. They are well made now, comfortable, and inexpensive.

If your guests can lean down enough, a trundle bed?

A pull out sofa works work- assuming I can find one to fit through 29” opening. This has been tricKy. I can’t give up a window for a Murphy bed, it is already so dark.

A tall book case or built ins would definitely be preferable- just where to fit it. Also, do I create a mantle of some sort? The current shelf above the fireplace is not center and drives me crazy.

If I paint the paneling must it be white or off white. Would a colored paneling be strange? The rest of the house is Fragile Beauty, a soft off white, peachy color.

We have a small pullout sofa in a spare space. It's barely 60-62" wide and has a full size mattress. It works out fine for occasional guest. We've had it for probably 15 years, and bought it from a small showroom but I think you can find similar size at Jennifer Convertible. I haven't found another sleeper sofa this size at other mainstream stores: R&B, CB, PB, West Elm, etc

I have that Ikea sofa shown by Maureen - it is comfortable for both sitting and sleeping. It also has storage under the chaise part. It came in several boxes and you can choose the side for chaise when building.

We have an American Leather sleeper sofa, 63 inches wide, with Queen bed, in our office. Very pleased with comfort, both for sitting and sleeping. Not your cheapest option, but versatile and will last for years.

Conley Sleeper Sofa

Thought this article may help.

https://www.roomandboard.com/blog/2017/11/small-space-nyc-transformation/

You really need to find a home for all the books unless you use them all , all the time. Right now that room is no where I would like to sleep. IMO cover the fireplace with the murphy bed in fact you can even get one that incorporates an office . IMO this could be an office and a guest room and forget the den idea, Ilove books but IMO most info can now be found online and in a small space actual bookcases take up too much room this murphy allows some book storage a desk for you to work on and nice place for guests to sleep . Honestly in this small space I think that is all I would do. Or a sleeper and a desk maybe use a closet for other storage guests really require very small closet space

narrow built in shelving floor to ceiling on either side of the fireplace. I would paint the paneling, the shelving and the fireplace all the same warm white.

I agree with the book issue and I wouldn’t want to sleep here either . I am a researcher and this is my parsed down collection. I do use these all regularly. It is an interesting suggestion to just cover the fireplace and forget the den. I’ll contemplate.

Unfortunately there is no closet in this room.

You have to decide how you want to live when you have guests. Would you give up this room--your office--or your own bedroom for the guests? For many years we gave our bedroom to our guests because our "guest room" was also my husband's office, which he needed.

Yes, we give up this room for guests as my husband’s office is in our room. In normal times he mostly works on site and I can camp out in his office nook.

Maggieq- does only one person sleep on your sleeper couch? It looks difficult for two people to get in and out of.