It would have been better to post both rooms in same dilemma.

Is this the room that will have the TV?

Where is the living room in relation to this family room?

This family room is on the ground floor and the living room is on the 1st floor. @shirlpp

I am planning to put the tv on the wall that is circled in red attached.

Not that these are you only two options, but I don't think your planned location for the tV is going to work with this room and all the traffic patterns that run through it.

Agree with @User Tucking seating into the corner formed by the stairs would leave the walkways open.

The bath needs privacy, that whole area is a hall, ......add some wall and block

For a VERSATILE SECTIONAL, look at Love sac. and don't plop a weeny cocktail, between two chaise versions

https://www.lovesac.com/?gad_source=1&gclid=Cj0KCQjw99e4BhDiARIsAISE7P_jg7RSl39euIxxIyvs5-CyfvPbA5f1xL2pJUd7_TBCPuzgXaTKUbkaAjwNEALw_wcB&gclsrc=aw.ds

A sectional looks like it could work. You might want to do a smaller, apartment sized sectional with some chairs so you can make different layouts if needed.

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