This house came with two living rooms. This still baffles me. It is certainly a design challenge. Right now we have it set up so there is one more "formal" sitting area, and another by the TV. Eventually I'm thinking 1 living room and 1 dining room. We'll see. Either way, it is working for us now.
We made a trip to IKEA soon after we moved in and bought this new couch with a chaise and navy rug. We also bought the chair below, which I highly recommend:
The midcentury pieces were thrifted either in Michigan before we moved or here in Utah. The record holder above was $5 and the side table was $8. The record player two photos above was $40.
We painted all the wood paneling in the living room with a fireplace, but left the built in shelving as is. It adds some nice warmth to the room.