Do this arrangement and pull your Christmas tree out from being smashed in the corner.

@beverlyfladenzier I tried what you proposed but the living room is too small to accommodate - there isn’t any room to move from the dining to living space due to this corner of the wall (pictured)

If the tree were moved to a different wall you might have enough room.

Or perhaps moving the one chair might help the spacing.

Kristina, have you tried this configuration

?

The Christmas tree position is correct, if there is some art related decoration on the wall near it, then it will look full of empty space.

Beverly's spot on. Get an appropriate sized rug to define you space--use ALL the space. Everything crammed up on the fireplace isn't working. I will never understand a TV in a room where no seating orientates towards watching it. There's confusion and dishonesty in those configurations. The drapes, matching the walls hung waaay too high...they are adding nothing to your space. Those divided light windows with no casings call for a different sort of window treatment, perhaps roman blinds.

On a larger rug, float the sofa facing the FP and flank it with one chair with its back to the window and the other with its back to the frosted glass door. Hang your clock above the mantel after the tree is gone, and move the TV to the longer wall where the tree is and put your furniture back like you have it now, but more open and not so squeezed against the FP hearth.

Can the couch face the fireplace? What about a chair on either side of the fireplace as well? Perhaps that layout might work.

Couch facing TV/fireplace:

Downtown Denver Condo · More Info

Chair on either side of the fireplace like this:

St Paul Modern Luxury · More Info