There is a window at the side of the room. 1930s Bungalow

I would for sure spend the money to remove the wall and I think the idea of a large island with stools is great if you have the space it is hard to tell from the pics a floor plan woulf be very helpful and maybe some more pics from different perspectives also.

I would wait for the rug, until you have the shutters up and your furniture placed..it may take on a character of its own and you'll want to compliment. My first thought though was to coordinate with your kitchen and incorporate some black, with a black/beige stripped rug, which would be fun with the wallpaper and perhaps paint your chairs black, add the shutters and you could paint the window trim black and add a large black chandelier.

Everyone has some valid points and so I would also recommend moving the clock to the kitchen wall and place the wall unit under the mirror. Centre with the table with the additions of some artwork each side if the clock with wooden frames to match the clock. Find a low piece of glass or pottery or a runner to tie in the grey shades. I presume u have a grey lounge suite. Change the lighting as to what was suggested by People Space ARchitects.