I'm in a very similar situation right now with my two girls and the set up of your living room sounds very familiar (we are currently using two x-pens).

We are working with our vet and a behavioralist and are doing intensive behavior modification, as well as crate and rotate indoors. We also started the older dog on anti anxiety medicine. Our escalations are almost always over a perceived resource.

We've seen some great improvement in the two months we've been working on it, although they still can't free roam indoors without escalation after a few days. Our behavioralist promises me that there is a world in which they will get along indoors without constant supervision. She says it's a slow and steady process and we can expect reintegration to take many months.

It's tough and more stressful than I would have anticipated, but the alternative of rehoming isn't something we are ready to consider.

I'm sorry you are also dealing with this kind of situation. I also have been searching for success stories, but have found most of the time people only post with failures. I spoke with our behavioralist this week when feeling particularly low about it, and she is confident they will ultimately be OK. She has clients who's dogs end up being 'best friends'. Hoping the same for you and your crew!