Put the bathroom to the left of the utility room and you will have unobstructed open space. If the ejector pump is being used it can be installed inside of the utility room and you can adjust the layout to keep bathroom entrance from the main living area.

Could you use another bedroom or an office where the closet is; assuming that is a legal egress window? Consider moving the bathroom door around the corner so it is more convenient to the bedroom/office. Can you adjust the door location on the utility room so it isn't the focal point when you come down the stairs? Otherwise, I'd leave the floor area open until you decide that the playroom is too noisy for the TV viewers.

I agrewith both above, but rollong barn doors to the utility room would be more attractive than a standard door. Even without a bedroom, a legal egress window is wise. Fires can happen during the daytime as well.

Thank you.

Yes it is a legal egress window, so no issue there.

Regarding moving the bathroom- it's already roughed in at the location I have marked. Even I don't like its location but I want to avoid additional expenses to relocate bathroom.

We already have too many bedrooms in the house- for a family of 4. Although, it does not hurt to have another one- but we were thinking to make family room area large- instead of creating another bedroom in front of the closet. May be put a pool table in the back- or may be a mini gym.

The entire space behind the closet is crawl space- which we are going to leave open (meaning, if you open closet door, there is closet and above 5ft its all crawl space.

Where we are stuck is what to do with the area in front of the utility room- it'd be a rather large area. If we wall-off family room on one side and play room on another- then this area in the middle remains.. what's creative way to make use of it- may be a bar?

How is the electric laid out? If you move the utility door around to the playroom side, you have an entire wall there for a dry bar or kitchenette if there is plumbing.