The room has very little color and no pattern--you need to think about that first. Then mount the tv higher and in the corner use a floor lamp if you need the light or just some framed artwork--maybe 2 pieces of art one above the other. Also you might want floor length curtains.

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!

Thanks for responding. We're in Auckland, New Zealand and close to the sea. Outdoor living is quite important but it does get chilly in winter so it's a balance. There are three adults and two young children in the household (one of the adults is an Au Pair who likes to spend time in her own room in the evenings). The kids will watch their cartoons generally in the morning and a bit before dinner. Then in the evening my husband and I will relax and watch TV. Right now the kids' toys are in the family room downstairs. We are foodies and like cooking. Generally when guests come over we all hang out in our small kitchen at the moment. The dining table we use for every meal time. We also like the idea of being able to get to the deck from the kitchen, rather than having to carry food in summer through the lounge/dining. The entry way is that big in order to reduce on the structural work but also in order to ensure that the door to the staircase is not in the lounge.

As you rethink adding a fixed window, consider either a fixed window that is the long horizontal kind over the shower/tub surround and/or an octagon one with stained glass for the dressing room. https://www.google.com/search?q=images+for++octagon+windows&biw=1366&bih=673&tbm=isch&tbo=u&source=univ&sa=X&ved=0CCIQsARqFQoTCOaJ69fb28gCFcYVPgodogsLDw You could add a couple of pairs of shutters to create a pair of faux windows that look as if the shutters are closed. If you don't want a window that opens on that wall, you might consider having a fixed window and shutters that are louvered to let in some light while protecting your privacy. You might also consider a faux gable with a faux window, perhaps functional as part of the venting system for the bath.