Hard to say about the set up because we only have two angles of the room, but, I would say, put your sectional under the two windows, and as for paint, I would do a soft grey because it would make your couch really pop (one has to assume that when buying a red couch, it is intended to be a focal area in the room ). I am also really big on flowy white curtains at the moment, so I would ditch the pull across blinds and opt for some nice white wood ones with the flowy white curtains...
Well, that wallpaper border has to go. In addition to being dated it is at a really weird height.
Can you do a floorplan? I use Sweet Home 3D---free open source software with low learning curve---but even a sketch would give us a feel for the room. And what are the dimension of the sofa. Anything else that is earmarked to go in the room?
No biggy for this but you might want to update your profile with general geographic location at some point. Given the palm trees, I am guessing Florida?