Candice Olson: DIVINE DESIGN

Kim and Rey met at a boxing gym and fell in love at first punch! Kim was a novice boxer who was there to learn the sport, and Rey was a pro bantamweight boxer using the gym for training. They bonded over hooks and jabs, got married, had two sons and now share their busy lives -- Kim as a children's-television director and Rey as a boxing-equipment distributor.

The couple recently moved into a charming bungalow and started to renovate, but were stumped when they got to their main living space: a long, narrow living and dining room. The room was empty, uninspiring and full of flamboyant colors chosen by the previous homeowners.

While Rey would have been happy to keep the space empty as a boxing ring for him and the boys, Kim said they would have to duke it out in the basement. She wanted this space to be a warm, welcoming and livable room for family and friends.

The easy part of this challenge was getting rid of the ugly colors. I painted the room a dreamy shade of beige, put down some gorgeous hardwood flooring and the vibrant tones were but a memory.

The more difficult part of this challenge was how to break up the room into cozy little zones. To this end, I put in a focal point in the middle: a new gas fireplace that anchors the room. I flanked the fireplace with new cabinetry and added some traditional bead-board panels above. I topped it all off with a dark wood mantle and clad the front of it in beautiful circular glass tiles.

Across from the fireplace I put up some cabinetry that I backed with the same bead board that went above the fireplace. I then painted the cabinets in a soft watery blue to give them some contrast and depth.

Next, I got busy dividing up the rest of the space. On one side of the room I set up a living room and added a host of new seating. I used the couple's ottoman -- the one piece of furniture they wanted to keep -- as a jumping-off point for the room's colors: earthy tones of taupe, beige, rust and cream. I also put in a tweed love seat and a chair in a lovely floral pattern. At the room's bay window, I put up a large woven blind, which I flanked with dummy panels in a large-scale geometric pattern.

On the other side of the room I created a dining room in which I put a large wood pedestal table. On one side of the table I put in some striped dining-room chairs and on the other I put in an upholstered bench. Above the dining room table I installed a modern chandelier with a chrome finish that will act as a bit of a visual barrier between the dining room and the adjoining kitchen space.

Lastly, to give the dining room an additional personal touch, I created a family-photo display area on one of the walls using a fantastic framing template. After a few more homey accessories -- mirrors, candles, pillows and lamps -- this space was complete.

Kim and Rey's living and dining room had finally made the transformation from an empty, color-crazed kid zone to a comfortable and beautiful space that works for the whole family. By using warm colors, cool fabrics and one hot new fireplace, this space is now a design knockout.

Interior decorator Candice Olson is host of HGTV's "Divine Design." For more ideas or information visit www.divinedesign.tv. Her column is syndicated by Scripps Howard News Service.