I can’t believe I am saying this…because I am so against the tv in a living room, but I am going with it this time, so that the family room can become your dining room. It will be a good size and you can make it very comfortable by choosing the right dining chairs.

We are limited in size, as well. I chose a concrete dining table (or for you anything that will hold up to lots of use), four comfortable side chairs and upholstered host/hostess chairs. It is kind of an all purpose spot and not limited just to dining. I sit in one of the chairs and read the paper or do paper work, use it for serving if we have more than 6 dinner guests and the need is more for a buffet.

The kitchen/dining area will have quick access to the covered patio where you could add outdoor seating and a grille...

How fun - I actually really like the layout, and think you can absolutely make it work :)

Do you particularly want a separate living and family room section? If you don't frequently have guests over to watch movies/sports, you could easily put a tv on the wall where the red leather chair is, and make that your living/family room. Then you could slide your dining space over towards the "family room" area on your diagram (Unless the hard floor vs carpet makes this too awkward.) I bet you could add a lovely reading nook in the corner or desk/workstation (by the window next to their tv station) while still leaving plenty of room for a dining area.

If you have to leave your dining where it is because of flooring transitions, or if you want separate living/family room sections, I'd still put the tv in what's labeled the "living room," while in the "family room", you could have an L-shaped seating area in the corner with the seating against the wall (instead of curling in the room middle like their white leather sectional is). That'd open up the room a lot, leaving a good walkway into the "living room"

Seating in the "family room" - Like this, without the chevron chair