You have all the reasons to redo the house, its very lifeless and looks worn out. I feel creating a separation will terminate the spaciousness of the room. Adding colours will surely help, Since you have a tan color sofa,I suggest grey, white or light blue color on one of the walls. Add some art works of the color you chose for the wall. This room needs some fillers like , books, throws, candle stands tall and lean. YES DON FORGET 1. Mount the tv on the wall make some space on the floor and Fix a large size mirror ( Wooden Frame if you can afford).

I guess you can add beauty with few unique wall decors. Check out few cool options here - http://smallthingsafterall.com/wall-decor-and-accents.html

Photos of your room will be helpful. You can attach them if yo do a comment under here.

Wow that's way too much. How would a polymer alcove come in from the main powder room door ? A comfortable moving space is around the 23-24 inches. It may be too cramped up imagining from what you have described. WC is facing towards the shower area? You may draw up the plan and share it here for better understanding. Nitin Cornerstone Designs.