My understanding, and I could be totally mistaken, is that the moths are attracted to the smell of wool. The moths lay the eggs, and as inox wrote, it's the larvae that do the damage by eating the wool fibers. I've been under the impression that the aroma of cedar masks the odor of the wool. To renew the cedar, sanding will help get down to "new wood" and might release a bit more of the cedar aroma. It does depend on the age of the wood though. There might not be much aromatics left in an old board. Sanding should lighten the surface color of the wood. So you could sand the walls to release some of the cedar aroma. If they are not bright enough, you could staple a non-wool fabric high on the walls and let it drape down. Just my thoughts. I'm by no means an expert or even mildly educated on this.

I have already started de-cluttering the inside of the cabinets and it turns out most of it was just holding junk that needed to be thrown out. I think a pantry will hold the essentials. The counter as it is now extends into the living area a little, but the space is small enough there is room for a table or bar chairs, but not both. So the extra counter ends up being wasted space. I feel like I want to remove the bar, I just hesitate because it's actual real wood and not particle board.

Hello, I think increasing the depth just a little bit to 24" would be a smart move. It will give you a little bit more space for storage (as we all know, everyone can always use more storage space), and it will visually balance out the space nicely. I would just make sure that you do have enough clearance to open the linen closet doors without hitting the tub or getting too tight!

Thank you for all the suggestions. Do not be sorry for saying your opinion, I have understood that everyone has different choice and likes. So I will not mind. We do not have any book collections. So I am not sure what I will be storing in them. The first photo was taken when the house was staged. To make it look that I need to but those huge books that we do not read. :). Jokes apart we will using the space as secondary TV room\entertainment area for big gathering. We already have another primary family room. I like low maintenance, with so many shelves I need to do regular dusting which I am not up for. We are painting all the windows and trims and base boars white in the room. I do not like the wood color. It make the room dark. Here are the additional photos of that room. These photos are from listing so the room looks brighter, but believe it does look this bright in reality. To explain my choice, I know adding a window seat that current height would be too high. So I wanted to reduce the height and get it to 20 inches. We may have to change the window in the future as these are really old. When we do that we can get bigger window that will match the window seat height. I hope that makes sense.