I vote for hardwood or engineered wood through the whole space, including the kitchen. Opening the wall would be nice, but I suspect your appliances are arrayed along that wall? I'd paint the wall the same pale color as the living space, and hang a really big mirror on the wall if you can't open it. Then you open the wall visually, and reflect the light from the sliders back into the space. (I know...me and mirrors. They are great manipulators of space, particularly when you commit to making them big!)

You might consider moving the sofa to be centered in front of the window and put the chair nearer the door adding a pony wall height bookshelf (with its back to the chair), with or without doors on the entry side, between the chair and the door to create an entry; perhaps something like this: http://thegamersforce.com/ikea-glass-door-bookcase/bookshelf-inspiring-low-bookcase-with-doors-bookcase-with-doors-ikea-dark-brown-bookcase-with-glass-glass-door-ikea-bookcase-singapore-ikea-glass-door-bookcase-ikea-billy-bookcase-glass-door-instruc/ A barrister style bookcase could also work. Such a room divider would give you a place to add a lamp to the room.

What are you willing/able to do? What, specifically, are you unhappy with? Are you considering replacing the furniture? Paint the walls? Without more information it's difficult for me to make suggestions. However, I'd strongly suggest moving that chair away from the draperies/window. And also change the paint color. Is the room as small as it looks in these pictures? If so, that furniture, in my opinion, is far too large. When you say "Beautify my living room again" (again being the word I'm referring to), what did it look like before when you considered it beautiful? I think you've got a lot to work with. It would also probably be a good idea for you to post this also in the Home Decorating Forum.

I've got one these right now. It's a beautiful space, but temperature regulation is an issue. Watching TV is an issue, too. The sound is lost in the room and we have to turn the volume up quite a bit to hear. As a retired appraiser, it makes more financial sense to floor the second story portion. While not a wow factor choice, it increases your useable square footage and will result in a corresponding increase in valuation. The point is, there are a lot more factors involved and unintended results of the decision to go with a 2-story high space.