It's hard to tell from the picture what exactly but the bathroom is like. What size is the space with the toilet & sink? If it's small, you could go with a pedestal. They also have some pretty smaller vanities at www.Bertch.com or www.Masterbath.com (Home Depot)Once you decide on vanity or pedestal(get suite so they match), you can decide on tile for the floor. Wainscoting looks great with wallpaper or paint above it with pictures on the wall.I find that picking subtle works best & putting color in the walls or towels,etc. That way I don't tire of it.

I have small guest/second bath and every part of me wants to rip out the small tub/shower and replace it with a walk in shower. I don't take baths, I am sure none of my guests will take baths. However, I have decided to eliminate the bath in the master, so I think I forced to leave the bath in the second bathroom. As much as I hate it, it's going to have to stay I guess so the home has at least one for re-sale. The other part of that is that if I ever did have a friend with kids visiting, they do need a bath for the little ones. If I had all the money in the world and was planning to die in the home and never sell I would not bother keeping any bath tubs at all!

How high is the knee wall? You're going to have a window in that knee wall? Dormer or low-set? What is the ceiling height over there? Would a skylight work instead? Why do you prefer not to have the window over sink or shower? I think all of your sketches tend to chop up your space. To have to pass the shower walls on your way to the sink or toilet is rather confining. Usually it's better not to put plumbing in an exterior wall, and it's nearly always cheaper to keep it one wall. My instinct would be to put the sink on the left wall opposite the door, as it the pleasantest part of a bathroom to see when you walk in or the door is left open. Then the toilet next to it. A sink should have 30 inches of wall space and a toilet 32 inches - but I am not sure if that space can overlap in the unoccupied part of the wall - I think it can. And then you are left with the space next to the exterior wall. You could have a big shower the whole width of that wall and a window set high in that wall (or a skylight). Or a smaller shower with the window next to it and shelves or vanity table or chair under the window. You can have frameless glass doors which will keep the visual space open, or even a partial partition and doorless shower - you put the showerhead in the partial partition aimed away from the shower opening. Or you could have a tub with a hand held shower. What you do with that exterior wall depends a lot on your climate, and how high that knee wall is.

4'x7' is a waste of space when it comes to a closet. It's not big enough for hanging except on one wall and a bit of the small wall. You'll get better storage in less space with a simple reach in closet with organizers. The bath itself also needs to increase in size if you want a soaker tub and a shower. A soaker tub isn't designed to work with a shower. You need a shallower tub with an integral tile flange to work with a tub/shower situation. A deep soaker tub will be a PIA to step into to use as a shower, and you'll have water infiltration issues if you try to use it as a shower as well. Also, most 4 bedroom houses would want to have 3 bathrooms. You may want to rethink your wants and needs and the small size of the space you are working with. One needs to reduce, or the other needs to enlarge. Since you say the budget is small, and this will be an expensive project, I'd suggest reducing some of your wants, and eliminating one of the bedrooms to better utilize the existing space split between the others. A 3/2 is a common configuration, and would give you more space to work with for the design. Remodels like this are costly because of working within the constraints of the old footprint and accessing the major systems. Also, integrating the old and new isn't always successful. It's just easier to do plumbing and electrical and HVAC (all of the expensive stuff) when the walls are completely open and you don't have to fight the old stuff into submission. It's one of the reasons teardowns of older homes in older neighborhoods became popular. It's less money, and you end up with more house that has more modern proportions and amenities.