Create a stronger focal point in the seating area by finding a rug with a strong graphic pattern. That will bring the focus into the center of the room. The add accessories in that area that relate to the rug.
Have a professional or find a on line program to create a floor plan so you purchase the correct size rug
Remove extra furniture that is not in the seating area( shelf by window, low table by window) which distract from your new focus

I realise it's a bit of a mission, but I seriously think you should get rid of the arch above the television. It serves no purpose and just looks busy and pointless. Similarly, you have too many small items in the room, I think, so I've cleared up the bar area, including removing the ceiling light. The small things just make the room seem restless. Further, I think you could pull the chair next to the fireplace a bit further into the room so that it has a better relationship to the couches.

Oh, I also think you could get a more solid-looking coffee table to provide a stronger central point for the seating area.

Pull your furniture in closer together to make a nice conversation area. It will also make a nicer walkway from door to door in the room. It almost looks like the brown couch is infringing on the traffic lane behind it. The furniture could also be scooched closer to the TV wall. The chair on the right needs to be pulled together with the rest of the pieces.

Thanks for all of the wonderful suggestions everyone. We have been looking for a large piece of art for above the fireplace for a while now. I never considered a mirror, because the living room area in step down and I don't like seeing myself daily when I enter the room ;/ But it might be something to consider.
I agree with the arch above the TV. The house was built in the early 80ies and the previous owners had closet door there. I hated those and removed them as soon as we moved in, but that is as far as I got.
The current couches are so far apart, because they recline and my hubby LOVES that-- I don't, that is why I was thinking sectional.
The coffee table was actually from our living room, and was supposed to be temporary- now a year later, it is still here.....

flair lighting- Would you put the valances on all windows, or just the 2 surrounding the fireplace?

What a pretty room! Consider 2 arm chairs (swivel & rocker) on the wall where your love seat is - with one table between them. It looks ok for the chairs to be a bit outside of the defined wall - but no so good having the tables floating out there. A large chenille upholstery sofa could replace your current one and a round upholstered ottoman on legs in front of the sofa would allow for "feet up" or a tray for drinks. In your idea book, the "Palmetto Bluff cottages" look is perfect for your room.

I just noticed your other two photos. I would get a larger painting above the fireplace. A dark frame would be better than a gold one. I would go for deeper or more vivid colors in the painting too. I wouldn't get a sectional until you make other changes and see how you like it. I just read in a back issue of BHG (June 2012) a home owned by a designer and she prefers sofas to sectionals because of more flexible arrangement of furniture and there is more room to place tables to rest food and drink. She has a pretty open area like you do. The accessories along the back wall of photo 3 distract my attention from your gorgeous windows, especially the covered bookcase, lamp on it, and orchid. When you move the furniture closer to the TV, you may very well find room for a little reading, sitting or game area(s) either in front of the fireplace or near a window(s). I personally don't care for the idea of a mirror above the fireplace, as the room is already plenty light and airy. I would love to see a large painting there. On the mantle, more substantial accessories than are currently there. Again, I would opt away from gold. You have a beautiful home. You must enjoy it very much.

I would do all in that room and drywall over the one where the tv is! And add an arm chair on opposite side of fireplace

You've gotten good advice above. I would not do valances, though. They will detract from your beautiful windows and will look dated. I would also remove all the tiny photos on the walls, including the ones behind the loveseat (which are too big for that space).

The good news is your home has absolutely stunning architectural features. The bad news is you are going to have to be very judicious in your selection of decor items. As you have already discovered, your decor items are not adding the "cozy" feel you are looking for. I don't ordinarily recommend a professional be hired, but in your case, I wonder if a stager/redesigner would be helpful. They are experts in creating focal points and arranging furnishings. They are usually more reasonable than an interior designer. In my photoshopped image, I removed all decorative items and added a colorful rug. It leads the eye to a central area. Good luck - beautiful home, but challenging space.

Thank you everyone for all of the wonderful suggestions.

Doctornancy- thank you for your input. I actually really like what you did with the area above the TV. By eliminating having those panels painted it adds interest and is a great solution-- especially short term :) And I actually have a very similar rug (bold print and orange) in a different part of the house. Love it.

The area behind the loveseat is a wet bar that gets a lot of use, hence the clutter. I had pictures there to detract from the faucet. I didn't like the faucet standing out like it was, but it seems that the pictures aren't working either. Maybe some sort of backsplash???
All of the items in this room are items from our previous home, so they don't fit well. Maybe a designer is what I need....

All of the art/ pictures that I have are pieces that I have are very near and dear to my heart. They are pieces that I have collected over the years while traveling and while living in Europe. I have a lot of small paintings and have never been able to figure out how to display them. The styles, colors and mediums are different and unfortunately, I don't have a lot of wall space. Any suggestions?

Use the painting you have already but reframe it with a wide frame and a large mat to make the whole piece larger. It will work then.

You biggest issue in this room to my eye is the coffee table. It's nice but way too small. You either need a larger more substantial one or a couple of large ottomans to use as table with trays on them.

A lot of great ideas for a beautiful room!
•I agree with a lot of what has been said, particularly, getting rid of the arch over the TV. It is distracting and unnecessary. Consider making it a rectangle, and then adding some bookshelves with some beautiful books and pottery
•I would paint the white woodwork more of a beige color, not the same as the walls, but closer to the shade on the walls. I think it would make a huge difference
•I love the plantation shutters and would love to see you leave those gorgeous windows as is
•I would put the furniture together to form an "L", that faces both the TV or fireplace depending on what you are doing
•At the intersection of the “L”, you could put a round table with a cloth over it, touching the floor, in a beautiful warm fabric, maybe a Ralph Lauren with some red in it, maybe a plaid or floral with matching throw pillows, a nice brass lamp on it, short, with a black shade. You could also put plexiglass on top of the table so it is easy to wipe clean
•I love the idea of a warm geometric area rug, I would put red in that as well and get some throw pillows in warm colors that will stay in place on the leather. There are throw pillows that will not slide down on leather
•I would get rid of the curio cabinet behind the chair. It is distracting. A short little table next to the chair would be nice, and if a lamp is needed, maybe red or terracotta with a warm shade, maybe a pink bulb too
•A plant might be good in that corner or anther, but a taller tree-like plant in a terracotta or darker container, rather than white container. I would get rid of the other shorter plant as well, or put it in another room
•Lowering the fan is a great idea!
•Lastly, the painting over the fireplace is gorgeous. I would leave it until you can find a larger one. Great pieces like that are hard to find!

Good luck!

The idea to get the picture reframed with a bigger, darker frame and some matting is good. The picture itself is beautiful and if it is something you truly love, you should keep it. The colors actually are good for the room and repeat the colors in the pillows. If you get new pillows (not necessary), get some orange in them again.

If you have a wall available, you might consider gathering together all your treasured art pieces and creating a focal point, a collage of pictures.