What is the piece of furniture that is on the wall shared with the kitchen? I can't tell if it is a chair or a table.

Is the front door the entrance you use the most? If it is, since it opens directly into the living room, I'd try to create the sense of an entry way there. A console table for the key bowl, the mail and the other stuff you drop off as you enter the house. Maybe a place to hang coats and stash gloves and hats. A mirror for checking your appearance before leaving the house.

If you want to read in the LR, then you need good task lighting, either table lamps or floor lamps. I'd also want a table for a mug of tea and the books.

I think you would have more furniture placement options if you swing the sectional around 90 degrees so that one arm of it faces the windows and the back of that side faces the kitchen wall. That would help to create a "hallway" behind it, and allow you to add in a chair or two to the living room. You could move it closer to the TV and create a reading or game area behind it, or leave it pretty much where it is and and a chair and end table along the window wall.

The house is a raised ranch with the garage underneath. We primarily come and go through that entrance.
I agree that there should be a small hall tree or table near the front door. (That's what the mysterious piece of furniture is supposed to be). We use the hall closet for our coats/hats/gloves but it would be nice to have a place for guests things.
i'll try turning the sectional like you suggest and see how it looks.