I would also remove the small bookcase on the wall and put a colorful large vertical piece of art that you love on that wall. if there is room, possibly add an accent chair in that corner with the floor lamp. the lamp needs a companion in that corner and possibly a chair, again if there is room

Agree with lynartist get someone knowledgeable in to look at the walls. Shifting the color used makes a huge difference. I would not have the walls smoothed or made shiny. But there are all sorts of ways to approach this and end up with a great looking home. Consider moving the functions of the two spaces. A modern dining area with a fireplace, even such an ornate one, could be spectacular and marry well with a more intimate USED space for conversations, drinks, and even just solo book readin'! Making the switch would also de-emphasize the fireplace and allow it to look its very best. A bit of a paradox but look at many old European houses and you'll see it again and again. My other preference would be to have a wood refinisher take down the shine on the floor. Congratulations and I hope you let us know how this progresses.

OK. I have attached a pic of my living room. I have also attached a few pics of some rugs that have peaked my interest (the yellow flowers being my favorite). The only items in the room that will remain the same are the couch and loveseat. I'd like to keep my curtains if possible, but I'm not opposed to switching them out. Other than those 2 things, everything else in the room will be updated. Thanks for any input you can give!!

If you need a TV in that space, a dividing wall or tall half wall where you have the FP is the best placement. If you don't, I'd remove it and place a wall in the other direction, across from the doorway, so you have a space for a nice entry table and mirror straight in front of the door, and the living areas are slightly more private from the door but connected to each other.