You are making great progress! It is a little too soon for furniture layouts, but while learning this new software, decided to go ahead and post. No walls removed, but did use dan1888's suggestion of using the #2 space as dining, by just removing the doors. Ignore colors, this is just what the software offers. Disclaimer: NOT a designer - just having fun trying to figure out what might work! : ) Also, if you want to know what size something is that was used, I can look it up, it's simple to do.

Kitchen: The sink is moved from where it is was in your initial pics (not sure if that is actually possible at this point??), it's not quite under the window, but this layout with DW to right of sink, provided drop space for fridge and work space both sides of sink. No upper cabinets to help the narrow space feel a little more open. The pantry wall of cabinets are shallow at 12", hopefully that provides plenty of storage. The corner is a blind corner.

Bedrooms: Since there are no closets, wardrobes were used in each, plus 1 dresser/chest of drawers and a short bookcase under the window in children's room & bunk beds.

Living Room: 2 bookcases (they could have some closed storage) at the end and another at the opposite end by the window with a floor lamp and chair for a reading spot. A trunk was used as a coffee table for additional storage.

Dining: I used a round table since it can scoot a little closer to the wall and yet still feel somewhat open. A tall cabinet with glass upper doors for yet more storage. A small console table near the entry door, and a bench in the entry at top of the stairs.

If someone has some other ideas, and you would like, I can try to implement them and re-post.

As always, click to expand images.