Another GREAT Room! I'm struggling with paint color and have test paint BM Kingsport Grey and a Brown HC19 that I'm not as fond of. I was in the egg and i last week and their yellow top and black beadboard was very nice and got me thinking that might be good downstairs. Not sure. I was able to upload some pics onto picasa web -- I'll try to upload. Please excuse dog beds.

Oh! A family hangout room-- I can see where you would want a couch for that. I thought from your first description it was a room just for the kids to game and play air hockey. Just for fun, here are some gaming chairs. Most of the kids we know sit fairly close to the TV (not always this close though!).

Center the loveseat on the window. Push the sectional over toward the window so it is centered on the wall. The loveseat and sectional will be corner to corner, yes? Use a round table in the space left between the arms of the loveseat and sectional, with a pretty table lamp. Put the red chairs across from the sectional with their backs to the fireplace. Make sure the legs of all the furniture are on the rug. If the ottoman is used daily for propping up feet, keep it. Utility trumps fashion especially in your main relaxing space when you're on a small budget. You could drape a red plaid blanket scarf, a chunky knit throw (beige or taupe), or for summer a silvery grey or taupe pashmina (can be fake) over it to break up the black. You could paint the table that is next to the left side of the sectional a shade darker or lighter than Revere pewter to further lighten things up a bit. For curtains go with natural linen colour panels. Adding some pillows with a pattern will soften the sharpness of the black and red. I'll look for some pics :)

Your last image (inspiration?) didn't post, but I think I know what you're going for and I approve. A question: are you using furniture you have or purchasing new for this? A classic round game table might be better if you aren't repurposing an existing table. Or an expandable 5' round dining table so you CAN make it bigger if needed. Having to fit existing furniture in is of course a different job than picking out new stuff!