Thanks for posting new views of your room. You are right, nothing can go in front of the paneling, and we won't block the built-in cubby. In that case let's work with the rest of the space. I found a picture on Houzz for your gallery wall. I think this will allow you to bring in color and texture and interest to your wall without taking up space like furniture would. Try to play with portraits and a couple of paintings in there too - mix it up. Otherwise I would not put anything at the top of that landing (I'd remove that console table). That picture wall should be enough visual interest to your space and it'll draw the eye to the furthest wall as you walk in your house. I would try a small piece with closed storage between the bottom steps and that door by the entry. It looks like the space is no wider than 26", so it'll be a challenge to find something that fits and is tall enough. I would not use the wooden piece you showed above because you want wider proportions and fairly narrow depth so you don't bump into it as you walk by. (something like this ) I would hang a mirror on top of primping. By the cubby you could add a single seat stool. I'm not particularly suggesting these colors for the stool and bombe chest but something along these shapes. At this point if you do that big picture wall and add these two pieces of furniture and a mirror, you might not need to hang anything on the wall above the cubby. Also, I noticed your chandelier is quite substantial for the space and hanging pretty low. Would raising it a little or replacing it by something a little smaller be an option?

I would suggest you take out the cabinet that is to the right of the stove and use it elsewhere in the house -- perhaps in the bathroom or dining room with a hutch above it. Then, I would suggest you have someone install a lazy susan cabinet in the corner between the sink counter and the stove, meaning you would move the stove down a bit and have a small cabinet/counter top to the right of the stove. I would suggest you have the cabinets refinished in white and then paint the walls a pastel you like. If you would prefer white walls, then add white-painted crown molding and paint the ceiling a light neutral blue, such as Sherwin Williams Niagara Falls Blue. Then, I would suggest you choose a favorite accent color and use this sparingly in accessories like towels, pot holders, small vases or floral arrangements, and a valence above the triple windows. For a genuine 1940s look, you might have white ceramic square tiles with a rectangular red border installed as a back splash behind and above the stove. If you are replacing counter tops, I would suggest a light color such as white with a beige or light grey vein or striation for some sort of pattern. You might be able to find the same color and design in floor tile OR opt for a wood floor as another poster suggested.

Generally a sofa faces the TV. Not sure if the room is open at the end where you are standing or if there is a door or wall. You could even use the sofa as a room divider where you are standing and leave a walkway behind and on each side for traffic patterns. I would either mount the a TV on the wall it's on, or find a TV cabinet to enclose it that fits the space. Ballard Designs catalog has a shallow one that doesn't take up a lot of depth. I prefer to hide TVs in cabinets unless that is the only purpose for the space. Mounting them and having them in open shelving makes them dust magnets especially since the electrical charges attract dust. The draperies are pretty heavy and a lot of them. I think the room would look more updated and less claustrophobic with possibly shutters, that could also tie in with the ones hiding the opening on the adjacent wall. If using any fabric at all, I'd use only a valance but the draperies are too overpowering. The fabric on the valance could be repeated in throw pillows on the sofa or an ottoman used as a coffee table.

squeakerd - it is really hard to get a perspective on the whole area but if this is part of a much larger area then I feel you need to first decide just what you want as the end result. Do you just want your entire area to be one open plan or do you want to break it down into visually defined areas within the open plan. As you have the area now, I don't feel any cohesiveness between your table and the sideboard, I think I would move the sideboard to the end wall, it looks more like it would belong there, even just by the shape of the room. Definitely a larger rug will define the space better - just be careful of any trip hazard with the door nearby - but before you decide on the rug, consider window dressings and whether you want things plain or introduce some bold patterns and what colours look best in the area. Artwork can go where your sideboard is now, but again think colours and impact of design on the whole area. It is all very well to build a room around one piece, but you need to look at the impact that piece will have on other items and what limitations it could cause. I would suggest you set aside some serious time to look through photos on Houzz, especially if you can find areas similar to yours, till you find what appeals to you, put the photos into your ideas book and use that to build your room. I have found this invaluable in the past and it has saved me many an expensive mistake.