I have windows like that as well. We painted the inside of the window the same color as the trim. I'm not saying that's the way it has to be or should be, it's just the way that looked best to us. That area does get dirty also so using the same gloss makes it easier to clean. As far as the closet goes, if you don't want to paint them, don't. The only problem with that is when the doors are open it doesn't look very nice because the paint is obviously old and a lot more tired looking. If it were me, I'd bite the bullet and paint them. In some of our closets, we used the same color as the main walls and in others, we used contrasting color, it's really up to what you prefer.

Sorry no pictures available, and shutters is not a thing to do in NY (even though they can be nice, do not fit look in my kitchen). I have Noice tumbled marble for a back splash if that helps and a French/Italiam feel to my kitchen. (Walls are painted a sage green) Also need some priviucy since kitchen looks into neighbors yard and can be seen from front sidewalk.

Thanks guys..Maybe I'll put this project on hold since it seems it's not as bad as I thought. I was thinking a valance of some sort, just to add some color to the area. I lived here for 9 years with no treatments really throughout. THanks for your input

The primary reason for window treatments would be for privacy at night. Any treatment would be opened during the daytime. This is our family room and we spend a lot of time in there. It is the back of the house, but our neighbors are not far and with the lights on, you would be able to see us walking around, watching tv, etc. The other reason would be to add some color or design to an empty wall. There's no room to hang anything decorative except for using the door and window as a base for design.