I would skip replacing the shelf and the tv stand if that meant you could get a larger rug :)

Line the rug up with the middle window and place the front legs of sofa on the rug.

Put the two black chairs in the bay with a table and lamp; better yet, a chandelier.

use the ottoman for a coffee table, adding a tray on top; this is from Target and you can use it as a tray or a shelf and it matches the wood on the chair arms:

buy another ladder book shelf :

Agree with judianna20 on rug placement under the legs of the sofa

Thanks!! I like the chairs in the bay window a lot. Will probably move the ottoman to the bedroom and get a traditional coffee table… maybe a wood top with black legs?