My suggestion is this, find a great painter. Do a pickle finish on the knotty pine. Walls and beams two coats and ceiling one coat. It will still show the texture but update the space overall. Do NOT let them use a white that’s has warm tones, blue toned white pickle finish. Then the charcoal? Sofa/divan works. The area to the right of the front door is a play/study area. Move the tall cabinet on the stair wall. Then the wall it was on becomes the play area future game table study area with a comfortable large scale upholstered chair on the window wall. Then move the tv and console/stand to the wall opposite of the larger bay windows that backs your kitchen counter. Place a long console in front of the bay of windows and place the sofa/divan in front of it. Use the chair ottoman to the left of the fireplace for the time being. Add a comfy chair just to the left of the door when you can. Kids are ez so have a few floor cushions made for tv viewing fun. Cool puppy! Pyrenees? I ❤️ the wall lamp above the sofa. Navy or deep royal blue and medium green with a pop of coral are good accents and mount those shades about 3/4 of the way up the windows. Looks cold there so u can add neutral drapery panels to draw when you need a little insulation

Make sure your paint professional has not cut corners with the prep work. Natural pine walls like you had probably had some kind of polyurethane coating which must first be removed. All those knots must be sealed, or they will “bleed through” over time. I was where you are with our pine summer cottage a few years ago, and it took A LOT of time and effort! We still have several walls to go. Good luck!

Gina, fwiw, lots of designers are embracing wood panelled walls these days. It's all part of the current soft modern design trend featuring organic materials. Here's a 2015 Houzz article from Janell Beals about knotty pine walls. Lots of inspo pics. (I recall Janell from decorating boards ages ago. She has fantastic taste and a great eye!!) Also, while painting the walls is a big job and might be too time-consuming or expensive to do now, nothing forces you to paint ALL walls if you decide to paint. (Might already have been suggested upthread). What kind of material are the floor tiles? Wondering if they could be painted. I mean, if you can't stand them. (I like vintage patterned tiles so depending on their colours, I might not be in a hurry to cover them. But that's me. This is YOUR house. :)) Lots of materials can be painted and yes, often, it's a short term solution but there's nothing with that. Again, to my amateur eye, if you want a more open and contemporary feel in the space, changing the ceiling (which will include removing the soffits) and optimizing the lighting will give you the biggest bang for your buck. Could you even gain height with a new ceiling? I seem to recall this happened when Sarah Richardson redid a tiled 70s basement (one of her recent renos on her YT channel). Don't know how long you're planning on living in this house but I bet you'd recoup that reno cost when selling. All this to say, enjoy your space and the process to make it more "you". Don't let its shortcomings overwhelm you. As I tried to express initially, it's easy to get bogged down by our spaces when they fall short of our taste and decor visions but what house is perfect? Plenty of us live with design compromises and shoestring budgets. The important thing is that we LIVE in our (imperfect) spaces. :)

I generally would favor painting the ceiling and leaving the walls, but since you want to showcase your antique furniture (assuming you have other pieces besides the sideboard shown here), then lighter (or at least non-wood) walls would be the way to go. If you don't want to commit to paint, since that will be fairly permanent, you can also think about using thin wallboard over the pine and painting that the color you want. I might want the wall behind the sideboard painted and if you are open to painting the brick, then paint that, too, although you're going to have to love how your woodstove stands out against painted brick.