I tried to be as accurate as possible with your general requests.
First floor. Adding another octagon as you suggested gives a lot of new space for a brighter and more efficient kitchen. I would suggest you coat the kitchen cabinet a brighter color like creme or even white. It would give a much more spacious and bright feeling.
Meanwhile at the existing kitchen there will be a dining table close to the window with a beautiful view.
As for the laundry/mud room I suggest to give it some more space by moving the wall outside by some feet. It would be more efficient and give you a needed space for clothes and shoes.
On the second floor I tried to utilize the space as much as possible to create spacious rooms with functional space and lots of views to the lake as you required.
In the guestroom, I put a bunked bed since you mentioned that you have 3 boys and I find it the best solution if you want 3 beds in one room.
In the master bedroom I created a clean layout for the master bed and lounge area and left the closet and bathroom on the sides. I also left a glass window from the bathtub to the bed to create a communication and a good feeling, and also get a view of the lake outside.
The laundry room is small, but I think that might be enough since you have a bigger one downstairs.
I also tried to maintain an aesthetic exterior, as the elevation shows, by connecting the addition to the existing walls and roof in a fluid way.
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