Divide your living room into thirds. You will use the third closest to the kitchen as your dining area. The other two thirds of the room will be your living-room area.
Lay down a large area rug in the living-room area. Position the rug so the length runs across the width of the room to create a visual effect of a separate room.
Place your couch at one end of the rug and chairs and a side table at the other end of the rug. Arrange your entertainment center on the farthest wall from the kitchen, in between the seating areas.
Put the dining table and chairs in the middle of the designated dining area. Leave an empty strip of space between the dining and living areas to give your eye a visual clue that there is a change. Leave space all around the table if you have room so the arrangement doesn't look crowded.
Decorate your dining table with a centerpiece and place mats that coordinate with your living-room furniture. This touch will tie the room's look together neatly while maintaining the separate areas.