So you could have a sofa (two or three person depending on size of room) under the window and a single chair facing in just partly in front of the french doors. Or a couple of small side tables instead of the single chair. Really depends on whether you want to be sitting and reading on chairs or meditating on floor? Alternatively if the room is large enough you could face a sofa directly out towards the french doors and a single in the corner.

I'm going to assume that when you say the rear of the house is east, that's the kitchen! If so then you have a great northern aspect across your kitchen and living areas. I would think that opening those areas into a large space would be great especially considering your limited budget however make sure you adequately eave or screen those windows for summer. Come winter it will be lovely and warm and with the right eaves, lovely and cool for summer. Considering you have a 4th bedroom/study you can also use that as a separate kids space when you have guests so you don't necessarily need two living areas. As for the bathroom unless you have a second toilet somewhere don't make it one big space. We have this problem at the moment and you really don't want to have a shower while your kids doing their morning poo. Not to mention the fights when one of them is in the shower and anyone else has to go.

We agree, a rug could help define and delineate the different spaces! It looks like you may need some specific and quite large sizes - look for rugs that can be ordered in custom sizes to take the stress out of trying to make stock rugs fit! You have an absolutely amazing artwork on the wall there - perhaps use these blues and golden tones as inspiration? Blues would looks great with the wooden cupboards and accents. Some suggestions: https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/aegean-sky-blue/ https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/dover-light-blue/ https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/mars-light-blue/ https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/morgan-grey-2/ https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/soraya/ https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/venus-beige/ https://www.designerrugs.com.au/rug-collections/handknot-collections/contemporary-hand-knot/twill-blue/ https://www.designerrugs.com.au/rug-collections/designer-collaborations/akira-isogawa-hirameki/batik-ubud/

We have a large living room, with a lot of feature brick walls, which we have no plans to paint over, so seeking a floor covering that will lighten the room. We also have a pet dog and grand children so want something durable. All our furniture is marri wood and the walls that are painted are light ivory. We like the ivory and natural tones. Our colour point is green. What do you recommend