Depending on how close the windows are to the floor, you either just paint it (no boxes) or do shorter boxes that are the width of the window. The chair rail will run int the trim on either side of the window. BTW, crown molding is what goes where the wall meets the ceiling. What you are talking about is a type of waincoting. The attached picture shows true raised panel wainscoting (rather than the applied boxes), but it is the same idea. Here is a link that might be useful:

Thanks everyone for your advice and help. I know I must look impatient, but I've been staring at this stupid wall for months and months. What seems like minutes to y'all has really been months for me. I tried the easiest suggestion of disassembling the sectional and it simply just doesn't work. If it broke apart differently, but it doesn't and after breaking it apart and slinging the parts all over the room I've abandoneed that idea (which would be a great one if the thing would break apart right). While it is a great suggestion and was my original concept for the room, I've already had the sectional under the window and it didn't work; it is too wide and accentuates the narrowness of the space. I know this flies in the face of magazine decorating, but I think it is silly to have a room set up so you can't really watch the TV when the major purpose of the room is the TV. But if I also don't want the TV to be the first thing a person sees when they walk into a room, IYKWIM? I really like the moulding ideas. I've been thinking about that and seeing pictures inspires me and will help me explain what I'm thinking to my husband. Good ideas there, well, good ideas everywhere; I wish I could make some of these ideas work. I guess I have to make a decision: fashion or comfort. I have another couch and loveseat that reflects my taste better, more french country, but they aren't nearly as comfortable as the big, sprawly sectional and I think I might have to repaint since there is a lot of green in the other set. We bought this sectional because our entire family could sprawl out and watch TV, but now we're empty nesters and I'm rethinking it. Finally, dawnp, I do love this picture a lot. If I keep the sectional then that is maybe a good direction to go.

Will you watch TV here? Consider a sectional where the e-center is. TV can go where the desk is. Put it on a swivel or adjustable arm to compensate for glare. Use black out window treatments to make for a darker media room. If not for TV watching, then try putting an electric fireplace on the big wall with two sofas facing each other over a coffee table all perpendicular to the FP wall. Put 2 more chairs at the end of that arrangement if you have room and need them. You may have space for a family game/snack table between the windows.

Do guest rooms need a "theme"? What would it be? Well, in my house it would probably be "Go Home, now..." Can you tell me if the walls and dresser need a good scrubbing, or is it an issue with your camera? I'm seeing some brown spots... If you're keeping what you have in there, I'm seeing a shabby chic/farmhouse-y sort of look...would that be something that you like? You need a few more things for guests to feel comfy...a mirror, maybe a wicker rocking chair...