I prefer the flow and functionality of option 1. Would you consider merging the utility and bathroom into 1? With downstairs bedrooms, you have a challenge with noise, especially if the loo is your main downstairs facility. So noise insulation will be key. There are lots of great products that you should get advice on for the partition walls but also between floors depending on what is above the bedroom.

I have the link to the house here so you can see all the plans. The garden is level with the basement. So the thought is that on the entrance level we will have an office, formal sitting room and guest bedroom with bathroom. It's the basement we want to totally renovate to be our living space where we will spend all our time https://www.myhome.ie/residential/brochure/51-sandymount-road-sandymount-dublin-4/4776678?utm_source=myhomeie&utm_medium=email&utm_content=propertyalerts&utm_campaign=residentialforsalepropertyalert

Has anyone else ever encountered this problem on a straight wall?

Personally i dont think either of the options on the table will work. You cant fit a 1.6m space behind the bed because the space between the foot of the bed and the window will be too small. I’m not sure the joiners suggestion works either because the dividing wall will visually cut the window so it will feel odd. i think that you should be considering expanding into bedroom 2