Since you do not have much money you will need to do some DIY. Moving the toilet, sink and washer is out of the question. Remove the shelf and make a hamper/ bookshelf for storage. Would be nice if you had doors at the top to hide everything. Should be only 16 inches at the bottom and top half should be 12 inches deep. Clean up the wall with the outlets, using tape and drywall mud were the crack with the two pieces of wood is. The window I would frame two pieces of plexiglass with a semi-transparent design and mount it on the window ledge like sliding closet doors. Between the sink and toilet same plexi but all the way to the ceiling. Hopefully out of 2x2 if there is enough room. For the sink I would make a wood cover with cut out for the faucet to get a little counter space when not using the sink. Also paint one wall a different color for effect. Take the towel off the washer and add some shelving.

Unless you live like animals, carpet does not 'harbour' a single living organism. It's a scientific fact. It's your bed that harbours organisms. Carpet acts like an air filter for dust, waiting for you to vacuum it out. Timber flooring allows dust to be constantly stirred up into the air in the home unless you vacuum and mop daily. At the end of the day, go with what you like- carpet in bedrooms and not in high traffic areas is logical. I've manufactured carpet for years and wholesale carpet and hard flooring. There is a lot of misinformation out there about all flooring types. Happy to answer any queries.

I'd visit another couple of stores and see what they say. Sometimes a salesperson can have a skewed view. I always comment that my Dad has had floating floors from Bunnings in living and kitchen for over 8years now. In that time he's flooded the dishwasher. And he's certainly not a careful house keeper. And the dog comes inside. The floors still look good. Having said that - the new vinyl planks that can even go in bathrooms have caught my eye. And the look is more realistic. So keep an open mind.

Firstly find the product you want to use to work with the upstairs floor. That will guide you as to what you do with the tiles. Personally I’d remove them as I like to have a clear base for any improvement work I do. But plenty of people lay floating floors over tiles. Your flooring supplier will tell you which products can go over tiles.