Well, for lack of a better idea, since you find it a drafty little space. I'm assuming the draft comes in on the right? Most of the necessities in the area are located of the left side; i.e. vent, thermostat, light switch etc. What I would do I think is caulk up the drafty spots, maybe even add sized poster board wrapped in batting I covered in a gorgeous fuscia with diagonal grosgrain ribbons every which way covered with a heavy velvet to be attached to the area above & below the window. (Of course remove the drapes that are hanging in there). This for the purpose of using it as a pin-it board for notes. Attach a table height board covered in felt to carry across the full width of the little room. Leaving just enough space for a comfortable little antique desk chair. Paint the back wall a bright cobalt blue, paint the ceiling a silvery pearlescent white. Find a way to attach a clip-on task lamp. And stretch a heavy duty enough wire across the top of the opening and complete it with a heavy doubled velvet drape with a drooping valance. Place a swag with fringe & jewels on it to be closed when not in use. Voila intrigue is yours!

Well the piece above the fireplace really overwhelms the space, and most specifically the fireplace. Is there another wall space anywhere that can showcase it? trying to use this piece in such a small area makes everything else lose its appeal, it has to fight to be seen. For sure move the sofa where it faces the fireplace, or set at an angle facing where you hv the TV set to be mounted. If you can, leave the chair in the same area, use the table the TV is sitting on as a coffee table for both. The way that makes the space work is the way you need it.

Your lounge looks like it receives a lot of sun so you might like navy, turquoise, or emerald green for the room. Whatever color you pick, leave the valances (?) above the windows close to the color of your air conditioner, so it won't be too obvious. Use lamps and update the ceiling fixtures. Bamboo blinds might look fun on the windows. Look to the kitchen floor for paint colors in there. It appears the range hood is way too high to be effective. Is that just the perspective?

How come you don't want to go with the two lounges in the room if it works out okay?