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Small L-shaped living room and play area

We’ve struggled with this awkward living space for years and it’s gotten more difficult to negotiate with our toddler’s growing play area/toy collection. It’s always been hard to arrange this room in a way that gives us defined spaces without feeling cramped, and most of our furniture are old bulky hand-me-downs, so we have plans to replace everything little by little. We are also planning on mounting the TV above the mantle next weekend. Should we keep the same layout as we upgrade our furniture, or is there a more coherent way to organize this space? It feels like we’ve tried everything over the years and I’m going crazy!

I’ve included some photos that are about a year old but we still have basically the same setup minus the ottoman, as we have moved the coffee table in its place. I’ve also included the actual floor plan we have for the dining/living area.

Thanks in advance!

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