I know this is an old post but I wanted to comment and also hear back from the OP to see what she came up with. I immediately thought about "remove the closet door and hang a curtain" b/c this is what I did first with my nursery. Any door takes up 3x3 feet of space so it's a no brainer - get rid of the door. I use a tension rod for my curtain - made it from a cute piece of fabric that was on sale. The second thought I had was to rearrange the "sections" of the room. I would move the crib and rocking chair to the right of the entry door - by the window area. And then move the dresser and shelf to the left side, next to or opposite the closet. The reason is: there is probably more movement in front of dresser/shelf than in front of crib. You just get the kid in and out of crib, and then sit in the rocking chair. But with the new arrangement, you can let the toddler play in the open area on the left.

I like blue with tans and creams, but as was said by the previous poster, the white would be too stark, you have all tans and creams. The second one looks like it could work, it looks like it has enough color to pull from for accent colors. It depends on what other colors you want in the room, but I do like the second one.

Difficult room, but TVs never go in front of windows. Try moving the sofa at a 90° angle to the fireplace and put the end table on the other end by the wall. The only other option I can see is to put the TV over the mantel which I would do before I put it in front of the window.

What do you want the room to be used for? Only a living room or a living room plus office like you have now? Living room and dining room? One quick suggestion- Even in a small room, in fact, especially in a small room, you want to try to use less decorative accessories. Using too many decorative accessories even if they are smaller can read like clutter. You are better off having fewer, even larger ones. That goes for art, fabric hangings sculpture, dolls and decorative objects. For example, a large embroidered fabric 3 feet x 4 feet elephant makes much more of an impression. Same for a Hanuman or Todsakanth mask, or a dancer doll. When on it's stand, if the height reaches to 2.5 feet, that makes a wonderful statement. They can be displayed in different ways, for example you can purchase a decorative corbel or bracket and put what you want to display on top. Try to go through your things and seriously think about what has strong sentimental value or that you love. Get rid of the rest. If you still have a lot of things left, you can rotate them, they don't all have to be on display at once. Think of your place as a museum, and you are rotating the collections. Also, if you don't love the curio cabinet and the china cabinet, you don't need to keep those either, because you may not need all that space just to store the collectibles you are now purging. It's important to remember that just because you may be getting rid of some posessions that you inherited doesn't mean you are getting rid of the warm memories that are attached to those possessions, or the honor and love you have for the relatives that gave you those those things. You can of course always photographs these things to help you remember them.