Just have to say, totally beautiful room !! I'll leave the window dressing advice to the experts - of which thankfully- their are many on Houzz !!!
:-)

I agree except :) it's so lovely the way it is!! do you really want curtains? have you considered cellular shades? you could have both privacy and light.

A very narrow panel on all walls in bay. So 4. Fabric which you could make would have small white wod rings art ached on top and balls smal 2 on each opening. Hang so there is a draping on fabric at top. So get a very light weight fabric like rayon. Go a e small print ck Jo Ann's for fabric. Measure fron top of window to floor. Or you could buy ready made and do same treatment.

Thank you all for your comments! I am afraid to go with yellow curtains, can I go with white panels? I kind of feel its a safe choice. I will bring the wall picture thats above the sofa down as you have mentioned, travisinteriors.

mousemaker, Since I will not be painting the walls, I just feel that that adding the curtains will kind of complete the look.

not necessarily the color but for the 3 arrangements of the inspiration pics

I am leaning towards the last pic that you have attached for inspiration.. panels in white. Will that work?

I don't see why not .
There is space between the windows but there will be some overlap. Insure that the panels have sufficient material and reach the floor. It wouldn't look nice if it was "skimpy"
For more info on this treatment follow the link under the pic to ask a question to see the answers which you may be considering
Hope this helps

not the same thing, but the idea. I was looking for a picture of top treatment but I cant' find one. I understand about the curtains though :) I'm sure it will look wonderful and it will soften the room and be perfect :)

White will fun to try and keep clean...how about a linen or linen look?

ann dee's suggestion (picture no. 3) is perfect for your room. Choose fabric with a tone on tone pattern or texture to balance and add interest to that side of room. Once you add a window treatment, your beautiful room will have a completely polished look.

I am going to with picture 3 from Anne dee with white (tone on tone) curtains all the way from top of the 2 windows. Will use the same ones for both the living and dining windows. Thank you all so much for the help!

Have you figured out a solution for hanging the curtains in the dining room taking into consideration the wall sconces?
Curious

Have you considered a iron rod with a decorative finial and mabe some light tied back shears puddled on the floor?

way to go Anne dee!!! :) Ritsmach I 'm sure your room will be beautiful.

Combine roman shades in the dining room and drapes in the living room of the same fabrics. You won't disturb the sconces but will unite the openness of the two rooms.

I like that solution"deco' was thinking in that direction but wasn't able to locate the visual

I was just thinking about adding 3 panels right now in the dining room and skip the 2 where the sconces are. I thought that if I use baywindow rods and the windows don't look good with the sconces on, then I will remove the sconces and add 2 more panels.
Though now I wonder if I should go with the roman shades on those windows..

I think the roman shade with the same material you will be using for the living room curtains will be very effective in the dining room.
I am echoing the sentiments of "decoenthusiast" posted above. Check out the visual she posted for reference inspiration

I think "skipping" the sconces will look silly. Your home is so lovely, I think you should let fabric unify the two spaces as I posted yesterday with the combo of romans and drapes.