I would do an L shaped or chaise lounge couch to take advantage of the fireplace and window. With that type of couch, you could have the TV on a low tv stand to the right of fireplace. Looks a little high above fireplace for the tv...? You could then add a little round table and two small accent chairs in front of windows.

I think in a small space the fewer focal points the better so I would leave the T.V. above the fireplace( not the perfect height for viewing)I would just get a curved back sectional and then see what else you can actually put in the room By the way I personally would love to shoot the person who decided a corner fireplace was a good idea.

Depends on what is more important, one less focal point, or a broken neck... ;O)

I would not put the tv above the fireplace, put it on a nice cabinet to the right with an L shaped sofa. Maybe add a mirror above the fireplace to cover the hole.