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Suggestions for awkward room layout

My DH and I just painted and refinished the floor in our sitting room. The house is a quirky old cape, and this room gets a lot of traffic from a highly used entry. The woodstove is not decorative, it is burning much of the winter, so we can't have things too close. There is no overhead lighting, the pin-up wall lights are just there while we paint and work on the room.

The current layout:

The door to the left of the stairs is a bathroom, to the right of the stairs goes to the basement. There is a door to the entry that will be re-hung later today when the paint is dry.

Beyond the woodstove is a weird little space that formerly held a built-in desk and shelving above, then opens to the kitchen. I'm not sure what to do with that space now.

We have a couch and a slip-covered armchair. I might have a new slipcover made, but might wait for my evil cat to move on first and that color seems to work for now. I have lots of other pieces I can move into this room (and paint if needed), but want to get some ideas first. It is a small room and before this it was too crowded.

Across from the woodstove is a huge window with a great view of the backyard and gardens. I probably won't add curtains, the yard is very private.

So, ideas for this space? How would you manage this layout?

This post was edited by mabeldingeldine on Sun, Jul 7, 13 at 9:35

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