I think the question is not how to make the return but where to align it. Most mitered returns on a chair rail happen with the bottom of the chair rail aligned on the outside of the last tile, not the top, so the chair rail return ends up protruding equally in both perpendicular planes. If you can't interrupt the quarter round to run the return then I think your solution of scribing a small piece to fill the gap will work the best. It will look sort of like when crown moulding returns on itself short of an outside corner that it doesn't want to turn on a wall. In fact, I might be tempted to return it a bit short of the corner if you're going to do that and not butt right up against the quarter round so it looks more planned and intentional and less like it's just slamming into the quarter round corner. I would align either the top or the bottom of the chair rail (and play around with it to see which looks best) with that last grout joint you have there. That would mean cutting the top of your field tile though and with those rounded edges it might not looks so great. It's something I'd have to try a few different ways to see which looks the best to me.

Budge, THANK YOU. I think the window looks great with the tile and I'm going to have my contractor do the same thing. Did you use 6" bullnose on the inside of the window? I only ordered 3" but I think the 6" looks great. I wonder if I could use non-bullnosed tile on the inside of the window (run the same direction as yours) and put 3" bullnose on the outside, so that the grout line would be inside the window rather than outside...hm. I'd still need 6" bullnose for the top and bottom, but not as much. As for the bump in the wall, I went home and measured tonight and the brick does extend a good 4-5". SO, I'm stuck with the double bump. I think I am just going to tile over (to the ceiling!!!), inside and around the window and then start painting when I hit the bump. Thank you everyone for all of your help and great ideas - you all are the BEST!!!!

Whoah! Stop the presses right now. Forget get the pretty stuff for a bit, you've got ISSUES here. They are tiling right on top of green board in the shower area. (It's not painted with Hydroban, right?) That a HUGE NO NO! You need to put a stop to that RIGHT NOW! Tile in a wet area should be installed only on cement board over a vapor barrier. Or else you need to have a topically applied waterproofing membrane (the above mentioned Hydroban or Redguard) under the tile. You have big time moisture and mold damage waiting to happen with the way they are doing your shower. It must be stopped immediately.

I'm with GreenDesigns, tile the wall. I would think you could notch out the cove piece if you need to, to have the feet fit the coved area, and the back of the cabinet flush to the wall. It's easy to drill through tile, but do excellent planning before the wall board and tile go up so you have mounting blocks all across the vanity length. That's what I would do, then I wouldn't worry about hitting a stud for the mounting. If you ever have to change out the vanity you will have options when the wall is tiled completely.