That's a great room. My son is a big ddr fan so he would love your dance floor.
I've lived in a small 2 bedroom apt. for the last 3 years with my son, boyfriend (and on weekends his 3 girls). I had all my equipment as well as my office crammed into the dining room area. Desk on one side elliptical on the other stability ball as a chair and yoga mat got rolled out right in front of all this so I could login and practice online yoga or online workouts.
I think people do get this idea that they have to set up a fancy home gym and really all you need is a few inexpensive pieces of equipment, a small space, and the right exercises that fit your goals and your personality.
A while back I was teaching a 5 person boot camp at my son's after school care facility. We were surrounded by all kinds of toys and kid's work stations and tiny chairs. Just enough room to get a killer workout.
I also trained two people at a bike rest area along one of the local bike paths. We got to see all kinds of cyclists every day including a guy with a tiny black dog wearing doggles (always made us laugh).
I'll post a pic of my old workout area when I find it. We just moved into a new house and it feels huge compared to that old apt. Not sure where I'm going to set up my home gym so lately I've just been walking to the neighborhood park and doing a par course workout there.
http://www.bellaonline.com/articles/art62797.asp I love changing my workout environment all the time.