On which wall do you plan to hang the tv? Is the kitchen to the top of the picture or the bottom?

The TV connections are on the 12'6" wall on the top. Kitchen is on the bottom.

Get rid of the loveseat and buy two armchairs. They can be arranged with the 3-seater in multiple "L" groupings. Use the sofa to separate the two spaces and place the TV opposite. If you own this, be sure to have the short wall wired for TV too so you can switch up the arrangement when you tire of it one way. Don't hang TV over the mantel though. Don't you have any windows in this room? How about some photos for a better perspective and more ideas?

added the window and a couch at 7 ft from the TV wall. Seems too close to the fireplace though. Alston not sure where the 2 arm chairs would go. Seems like I run our of room real quick.

Move the sofa further to the right (not centered) and much further down toward the kitchen. Then you can place a chair floating in the room on the left side of the sofa, facing in to the fireplace. Maybe a small chair on the right also, depending on how far toward the kitchen the sofa can be placed.

Try placing the sofa to face the window and put two chairs where you have the sofa now.

Like this?

Chairs where sofa is; sofa with its back to the 13' wall, leaving a path behind it to the kitchen, and TV on your 12' wall

Your new plan is what I suggested, but I didn't realize that was a door/window next to the fireplace. Move the chair by the fireplace right next to the other chair. Then you should have room for the TV on the wall, as well as room to walk into the seating area and around the back of it.

Yes, that looks like it would work. The only reason for two chairs instead of a loveseat is because two chairs are generally more comfortable for two people to sit in, and it breaks up the space a little more. It's also more interesting than a matching sofa and loveseat. Additionally, you can use smaller chairs, or chairs on a swivel for better TV viewing, or fit a very narrow (<12") table between them. More options with chairs.

Loveseats are the bane of good arrangements and usually attract only one person to sit; hence the name "loveseat;" mostly occupied by two courting lovers. Chairs are more flexible for arranging and rearranging, block fewer sight lines and are more desirable to sit in. People like their personal space, and even on a 3-seater, they tend to leave the seat in the middle empty. How many do you need to seat when you have guests? A sectional will just constipate the space and block it up.

How about some bean bags for the kids? Store them in a closet and pull them out when needed.

A sectional would really close off the seating area in your space. It doesn't make sense with your room configuration.