Is it a big deal to sheet rock it? We probably won’t use it much....

You have to put strips of wood over the brick so you can nail the drywall to it. Then you tape the seams, paste over them, sand, paste again....not a weekend project! If you’re just doing that to cover the whole thing, you’d be left with a bump out/shelf that might not look so good so see if you can get the brick off. If you’re doing it to keep the fireplace, you still have to have a certain amount of the brick exposed so the drywall doesn’t catch fire. If it were me (kind of lazy and cheap...) I’d paint it...maybe a white wash that blends with your wall color, put a plant or candles in it and some art work on the wall.

That’s a good idea, we may just have to paint it. also how would I know if I can add windows to the sides of the fireplace, to make the room brighter? There are currently no windows!

If the fireplace is on an outside wall, should be able to cut out windows...assuming the fireplace vent is behind/above the fireplace (usually the case) and there’s unobstructed siding on the outside. That would be a job for a carpenter or you can check at wherever you want to buy the windows to see if they have someone who can install from scratch.

I'd paint the brick and add a mantle. Love the idea of windows on either side, but that won't be cheap.

What do windows usually cost?

@Tara Dunnerstein - It depends on what kind they are. You need to match the house, and then of course there is the labor to install them, and trim them out, fix siding, etc.

Painted brick will, inevitably, need to be repainted and look awful as it is about to get that way. Seldom recommend painting brick. IF, however , you hate the brick, research how to clean it first and paint it correctly so the paint will last longer. There is another option.

While I'd not want sheet rock over the brick (even though it could be done if done correctly), you might consider cladding the face of the hearth with metal and adding a metal plate behind the hearth door frame such is used around a fireplace insert. You could then add a wood surround with mantel both around and above that.

https://www.westchesterfireplace.com/regency-classic-i2400-wood-insert/

Alternately, you could surround the firebox with marble or some other non-flammable material first.

https://www.northlineexpress.com/pearl-mantels-48-williamsburg-unfinished-fireplace-surround-by-pearl-mantels-110-48-4592.html

How much windows cost will depend upon what you choose. The labor and new framing, trim, etc., could well cost you as much as new windows -- and installing them will need to be done correctly if they're to work properly.

IF you are DIY inclined, You Tube likely has some instructional vids and you could probably find a pair of relatively inexpensive gently used windows at a Habitat for Humanity Restore Store, especially in the spring when people are beginning their remodeling.

One issue to consider if you try used windows is that is that you may be getting problems you don't want. Some older removed windows may well be single pane windows and may not hold the heat in your room. You also need to be sure what you choose is up to code in your area.

Do you like the raised hearth? Have you considered removing it and adding a floor level hearth before you do anything else to the brick face of the fireplace? For instance, if you were going add marble or slate around the firebox and then a wood surround, you could use that same material for the floor level hearth.

Another idea might be to pick up a matching pair of used windows and create faux windows with them, adding a mirror or frosted glass or outdoor art poster behind them before hanging them on the wall on each side of the fireplace. The mirrors will reflect any light in the room. It appears you have electrical outlets on each side of the fireplace which means you could add light, hiding the wiring behind cabinetry or decorative framing around faux windows.

Prefer the third set.

https://www.proskypanels.com/products/fake-window/

Thank You so much for all these great ideas! Now I have to go price them out

Your firebox opening is required to be surrounded with fireproof material.
Check with your local Building and Safety and permit department before you decide what you will do. A surround which does not meet requirements may void your fire insurance if a fire occurs because the fireplace is done wrong/illegally/without permit. Safety first.