Hi not sure what you need from the building but I'd rather a bigger kitchen diner and just a loo + utility downstairs. Upstairs, I'd love a ensuite and family bathroom. Maybe build a single room (that enters from the hallway) upstairs would be the way to go here. And convert that small bathroom into a ensuite.

In my opinion you can’t create more rooms than you have windows. So you should give the larger master bedroom to the children and divide it with furniture or screens that can easily be removed by the next people. You would then take the bedroom with the balcony or you would use this space as a living room, make an aperture to the kitchen then add a partition wall to the living end of the kitchen to annex a new bedroom. Be aware that any bedroom off a kitchen may require fire regulation approval.

I would suggest starting by decluttering and organising your space and using baskets/boxes to organise items that don't need to be out in the open. Create dedicated areas for where things go (desk things with only desk things etc), If you could take a picture of the other side of the wall (closest to the wardrobe) then perhaps we could help more. Opening curtains does help with lighting as well.

It is hard to be sure but I don’t think you can move the large storage anywhere else so you are kind of stuck with your current arrangement. If you were prepared to block the window where you have your table you could maybe move the large cupboard there then have table on your left when you come in and keep bed where it is. It looks like you have lots of books to store I know you said you do t want any new furniture but if you got rid of the small desk I. The corner and replaced with a tall bookshelf you would be able to get all the books in one place. I agree a good sort out is the first step