Your laundry/mud/bath is a similar layout to what I have, except I have a tub/shower in that bath. A laundry setup like that doesn't leave you much storage, or room for ironing, folding, or hanging, so keep that in mind. I have to do my ironing in my bedroom. I also don't have a utility sink, to make room for extra cabinets. While a utility sink would be great, I do have a kitchen and bathroom sink close enough that it's not a big deal. And the way the rest of that floor is played out, it puts that bath really far from your guest entrance, office, living room and dining room. You mentioned a downside being that guests will walk through the mudroom, but remember that they will also have to go through your kitchen to get to the bathroom. I'm not sure I'd like that. BTW, you might as well forget about the door between the kitchen a mud room, as it will almost always be open. We changed ours to a cased opening instead of an actual door. I'd have preferred to go with a pocket door, just in case we wanted to be able to close it off for some odd reason, but we didn't want to have to tear into the wall to do it.

Do you have a separate Dining Room (this is where it would help if we saw the layout of the entire floor - both here and on Kitchens - not just the addition, the entire floor). I'm asking b/c if you do, you might consider making the table space a banquette and taking more space for the Powder Room. (Bench along the Powder Room and, possibly, "top" walls) Regarding the laundry - I'll be honest, I would not want my laundry anywhere where guests could see it - and putting it in the Powder Room means guests will definitely see it! It might help to build an enclosure around it - it would at least hide the washer & dryer, but it wouldn't help with any laundry sitting in the room - clean or dirty. Note that expanding the Powder Room may mean going with the narrower window (8'+ vs 10').

You are right there is not enogh space for an island but IMO not all kitchens need an island and some of the most functional kitchens are galley type layouts . If you go into the DR space at all the DR then becomes too small to function as a DR maybe think the other direction into the breakfast space since in a small house the need for 2 eating spaces is really not nessessary IMO. Iwould probably do an elongated U shap and then have the wall on the LR side all true pulloy pantries for storage eliminating the need for upper cabinets on that window wall with the range and hood between the windows for proper venting too If you post some pics of the exterior that will help with mud room ideas . I think I need a budget too.

Maybe zero in on your program requirements a little better and more firmly. You say you don't really need the Family Room, yet it is a 2 story. So what is upstairs, and is that a necessity? How critical is a bigger kitchen, and having an island at that? How is the existing Sunroom used? I do not know the site plan and existing house, but if it were only a Mudroom/Powder, Kitchen and small sitting area, it's possible that could be done next to the driveway with only a smaller 1 story addition.