Thanks! I think that's along the lines of what I was thinking, but looking for a comfier arrangement. I'd like the seating to be more set up for TV watching, as we already have another room with a fireplace that is set up in a more conversational layout for entertaining. And I'd like a longer couch but have trouble with the windows being in the way. Sometimes I'm afraid if the couch is off center between those windows it feels strange to me (particularly when putting art on the wall), but if the couch isn't scooched over then I have trouble with the zones working out. I don't think I'd want an oval table - that seems more dining to me? I already have a dining room and a breakfast nook. But maybe an oval is all that will fit there - it's hard for me to tell what kind of dimensions that space can handle.

Try a chaise sofa and one chair in the TV room so you have room for kids play area. In the living room use a 3-seat sofa and two chairs grouped around a coffee table and use floor lamp flanking the sofa.

TV opposite windows works much better -- you can see the the couch squeezes the walkway when you place it as OP proposes. I would have done the drawings as Beverly did. (For that matter, you'll likely find that your TV is wider than that wall between the windows fits comfortably.)

I love elcieg's suggestions. (I always do!) If your husband doesn't want to go with Gray Owl because he likes creamy, BM Ballet White feels warm and creamy but is less yellowy/more neutral than true cream; we painted Ballet White over old cream paint and before we got a second coat on, the cream peeking through looked positively orange. Ballet White is light enough to brighten the space while still providing some contrast with your trim. I do like the Gray Owl, though! I'm so glad you're painting the paneling. Your pre-gutted kitchen cabinets are giving me flashbacks to my childhood, when the pitfall of 70s decorating was oppressive darkness. The bones of your house are great and with a light color scheme like the one elcieg suggested, it's going to be fabulous.