The idea is this will be more of a formal living room for study, conversation, reading, etc. We have separate kids and family rooms.

No TV?

No TV. We have one in the family room in our basement.

Sofa on the long wall with no windows. Two chairs facing the sofa with a rug in the inside area of the seating area. Something pretty in the small alcove area by the powder room.

In the living room area by the kitchen, a pretty round table for friends, cards, board games, puzzles, small dinners.

If it were my house, I would put a den in the 'dining room' and the dining table in the living room outside the kitchen.

I'm confused by the floor plan, which shows the dining room below (in front of?) the kitchen. But at the same time, it looks like the end of the L open to the kitchen was intended to be a dining area (based on the lighting fixture). I'd probably do what Auntthelma suggests, and use that part of the LR for dining, and repurpose the designated "dining room" for something else. Although the designated DR looks like it has built-in cabinetry, so it is hard to make a judgement without seeing a pic.

For the LR, I'd definitely treat it as two functional spaces, one between the bathroom and window 1, and the other between the kitchen and window 2.

If you want you can make it as simply as you can. Just a suggestion :) coz for me I want my living room to be simple yet presentable.

Yeah, the previous owners basically had two dining areas and installed the light fixtures in question for that purpose. We are planning on changing or repurposing it.

The designated dining room is at the front of the house and does have built in cabinets, etc. so we are using it for that, leaving the L area available for other purposes. We would like to maybe have two areas, one more of a traditional living room and the other somehow incorporating the desk. Also wondering what to do with the alcove area between the room and power room.

Here's what the previous owners did, although I'm not sure I'm a fan. The double dining room thing, and the sofa facing nothing so that you're looking out into the rest of the room.

That alcove area would be perfect for incorporating a desk.

It would be, you're right. Unfortunately, the one piece of furniture we already have is the desk and it's too wide to fit.How ddo you go about thinking of colors for rugs and furniture based on the walls and flooring? Should it contrast or blend?

Oh, too bad about the desk size...perhaps you could use it backed up behind a sofa/loveseat, like a sofa table-to minimize having one end of the room look completely like an office?

As far as contrast or blending...you can go either way. Spend some time searching for pics of rooms you love that have similar floors to yours (although area rugs can change everything) and see what appeals to you. Your space is so neutral, you could do anything...find pieces you love, then build from there.