Will the room have a TV? This room can be painted white. Use top down bottom up shades on the windows. Will the wall to wall stay?

Do a photo search for Transitional Living Rooms. That should give you a head start on decorating inspiration. Here are a few inspo pics:

Tame Fish Lodge · More Info

Transitional Alamo Remodel · More Info

Meridian Tudor · More Info

The space has a lot of potential. I personally love traditional so it wouldn’t bother me.

I’d start with painting the walls white.

After that, depending on budget -
I would replace the light fixture
Pull up the carpet and do hardwoods 😬
Maybe add some faux beams

In regards to curtains I like those windows as is. Unless you need the privacy.

Awesome space. Would love to see more :)

Draw a floor plan with measurements showing the windows, fireplace, and doors. This will help to give you good layout options. It looks like you can have conversation area by the fireplace and an area for viewing TV, but that might not be the case. A floor plan will help.

Also, just because the house has a traditional vibe, doesn't mean you have to go that root. I see it all the time that homes with a Craftsman style have decidedly modern furniture.

BLANK SLATE.......................!!!!

The pic is your new space? What's the issue? Minus the previous owners valances, dated ceiling fan and heavy brown furnishings.......................it's a COMPLETELY blank slate. Move yourself and the baby in, measure, take your TIME.

It is no more, no less, than a room with a fire between two windows........

Draw it, measure, and DON'T rush to fill it. Move in. Relax..........

You can mix more modern furniture with a more traditional setting -- that's what "transitional" is all about. This space doesn't have wainscotting or even moldings, so your impression that it's super-traditional is because of former owner's furnishings. Once you get the fussy valences down, this can be pretty much a blank slate, even with the neutral paint color it has now.