This is what it looked like, before I started. (Well... a couple of years ago. I forgot to take before pictures again.)
What I did is to take everything out, put the rug down, put the desk back facing a different direction (I've always felt like the president of the neighbourhood watch with the desk facing that window, watching people go by; but don't like having my back to the door) and build a "window bench" of sorts. It's nothing spectacular, but it fit my budget and will do for now.
The left of the desk is the cupboard that used to hold the computer tower. I don't love the look of it, so will be reworking it into front and back book shelves.
I'll also be making coordinating pillows to go on the bench.
The "window bench" is a bit of a fake. I can't build anything permanent or closed in because of the heating register that's there. So, I took two old shelves that I've had hanging around for years, and put one on either side of the bay window. I had a board and piece of foam cut to the right size, wrapped batting around of them, folded the fabric over the lot of it and then stapled it all in place. There are lips on each of the shelves that hold the bench in place, so I didn't have to attach it to the shelves... not that I expect it will take much abuse. It's strong enough to sit on, but other than a cat perch, I suspect it'll mostly be decoration... with storage below.
The dogs and I love the rug. The cat loves the new window bench. Neither the dogs nor the cat seem to have noticed the fact that the dog beds and kitty condo were removed from the room. We'll see how long that lasts.
Also, I'm taking bets on how long it'll take for Himself to hack up a hairball on the rug. Feel free to post a guess of your own.