Is this a better layout? Is the toilet better to be kept in a isolated space?

Thanks for your input! In the first picture, the 4'1"* 6'6" unnamed area is designated as a shower room and the 6'7" *2'3" unamed area is used as a private toilet room (Yeah, I know it's crazy, that's why I'm trying my best to redesign this bathroom)

Yes, and that 2 ft 3 inches won't meet code.

No idea how expensive it would be to move plumbing, but if it was a blank slate, I would put the vanity along the wall where you have the shower and WC in design one (unless you can change the door location/swing, that space is too narrow for anything but the vanity). Tub where vanity is, shower and WC on 6'10' wall. 3 ft WC, 3 ft 5 inch shower. 

Still isn't great, doing this in my head and looking back at your space. I would do a drop in tub anyway, easier to clean and a place to put your book.

I like your idea of relocating the vanity to the other wall and wish I can start from empty state :). The drop in tub is sounds interesting. I added a makeup table next to the vanity and a small closet