You have very nice chairs! Take the rug out, remove the two end chairs, paint the table white like the color in the wallpaper, move one chair to desk, add a mirror on the wallpaper wall to break up the wall and add depth to the room (white or deep gray frame) and use you budget and add new pillows to the couch with more grays and whites.

Will the desk fit on the wall next to the shelf unit or are you are you restricted to the L shape for some reason? Could it work opposite the window & in the other corner better & the piano where white shelf is? If you can get all the measurements including for the new lounge & try taping the floor out to check that the configuration works. Otherwise as you say having the new lounge along that back wall means having the tv where piano is but could work, depending on the view from the dining room. Pictures on the bare walls & a rug will soften what seems harsh at the moment but as you are not sure yet it is hard to say... I have always moved things around many times until it felt right. I feel your pain & hope I have not confused things for you :/

I wish you the best of luck. Painting is the trickiest. I do design professionally and I do 3d for all my work. But for my own house. I have to try 14 sample colours to finally decide. I suggest follow that sample as much as you can. It looks like Dulux Arava to my eye.

I think Julies artwork/suggestions are great and you've done well with some changes. I suggest taking a lot of furniture out of the room, and only bring in selected pieces. You have too many now, running around the walls. Learn to 'rest' things or move them on. Hang the TV then discard the TV stand, then use that occasional table to hide cabling. Go to garage sales and look for a nice light fitting. Dont keep furniture because someone you love owned it. They only went down the shop and bought it themselves.