ctdoula: I'm so sorry about your DH. Your house is just adorable. I bet it will sell very quickly . . .but I am sure that will be bittersweet.

OP: Here's what I'd do . . .
(1) Functions. What functions do you want the room to have? A book nook? Open play space? Toy storage? Probably all of the above, so look for pieces that do a double duty. Since the room is small, using its height will be the best way to store things, and while you'll have to be the one to get things down, you can also limit mess that way.
(2) Color. Uniting things with color is the easiest way to get a clean look. Pick a color palette and stick with it, using one main color and 2 accent colors. Since you have the blue, pick 2 other colors that you both think go yet match the intensity of what you already have.
(3) Furniture. You'll find great things on Craigslist if you are patient. A headboard would make the bed really cozy.
(4) Bedding. If the bedding you love is too $, you can get something like a neutral matelasse spread at Home Goods for less than $50 (usually around $30), and then add pillows with the colors of your palette, or animals she loves, or whatever. PIllows are an easy fix. There are also some great, funky vintage chenille bedspreads on e-bay that often go for much less ($20).
(5) Windows. I like your start on the window, but I'd probably bring in a bit more . . .more fabric. Curtains are another cheap fix if you can sew and find inexpensive fabric.
(6) Floor. DEFINITELY a rug! Again . . .Craigslist!
(7) Lighting. It's amazing how lighting can make or break a room. I like a lot of Ikea's paper lamps. They are cheap and give a nice, soft light.
(8) As an extra, you could do some stencils. There are some gorgeous ones out there . . .not just the cheesy stuff you often see.