honestly we really need to see the whole room! and you need to take all things out and start from scratch.

You'll need to deepen the wall color for the contrast you want. One overhead light is not enough for your dark corner. That is what we call "ambient" light - just a way to turn something on so you don't fall over furniture when entering in the dark. You'll need both accent and task lighting - lamps. Your current furniture is very large and is eating up this small space. Before you replace it with an equally large "suite" consider mixing it up with a pair of chairs and an apartment sized sofa. Here are some inspirations for color and a pair of chairs.

Hi. I think a Chesterfield would be nice, you can find some small ones c5ft or so which will allow for a narrow lamp table or trunk. I'd go for a ŵall to wall bookcase behind the sofa with a couple of ŵall lights affixed. I don't know what styles you like but perhaps french doors painted in a dark grey to give a crittall look. Does the tv fit in the alcove if you were to add shelves and then add art over the fire with a large mirror on the ŵall facing you? I would keep colours light (is the kitchen grey?) and although it would fill the space a little I might add a narrow upholstered footstool which you can use as extra seating and/or add a tray on one half which you can accessorise

Difficult to say without knowing the style of your furniture you have/like. One thing I noticed, is that the previous owners did have the curtains just above the window frame. It looks better if you hang them closer to the ceiling. Makes the ceiling appear higher. Also, if you are going for curtains too, have the rods wide enough to be able to have the curtains next to the windows instead of in front of them, when open. I'd advise you to create one or more ideabooks here on Houzz, so we can see what style you like.