I’m no pro, and without having seen the rest of your space, I would move the chairs to the bump out instead of the sofa, add an area rug, and add some pillows for contrast.
I know a lot of people don’t like the idea, but I also like painting bay windows and nooks contrasting colors from the rest of the wall.
Not sure an extra light source is needed.

Some option.

I am not a fan of arched lamp. I prefer side table with lamp. I would get a rug to create conversation area.

area rug and floor lamp. but im not sure what is going on around this space, seems those chairs are in a walking path?

If that's a dining space to the right, you could float your sofa to face the front of the room then tuck the chairs in the window bay with a small table between them--everything on a terrific rug as celerygirl posted. And the arc lamp. That layout would solve any problems with flow as you may have now. Next time, show all side of the space. It's very welcoming to see a sofa facing an entry. If you need a "hallway," then float the sofa to face the dining area. Turn the coffee table around and put one chair and arc lamp in the bay and one facing the bay.

For context this is the whole space. It's an open living/dining area.

Thanks. With TV where it is, then I guess keeping the sofa where it is works. But you definitely need a rug to anchor the space. Make sure it's big enough so all the pieces fit on it. You didn't ask, but some kind of long, low shelving or very wide console under the TV with some art around it would look great and give you some storage as well. Layout something like this:

If you're planning on chaning the sofa, consider one with a chaise, which creates a bit of a separation between living room and dining area.

A warm camel sofa would go well with your floors:

OK:

Do not that that window niche dictate the furniture layout.

put a sofa table behind the couch and pull the furniture into th room.

add a rug to both spaces to define them, pull the whole room toward the tv.

You need a long low thin tv console

... Before you by any deco,you need to get the layout right.

First I would by playing with a layout of the chairs back to the door and the sofa back to the dining table

then I would try the sofa back to the door and the chairs across

the way you have it now works too, but the room needs to be pulled in.