I would definitely keep the storage room. Otherwise, the apartment doesn’t have much storage space or room, and where are you supposed to put cleaning supplies, bags for daily shopping, collectors for waste paper and the yellow bin, etc.? Always running down to the basement for that? Nope.
I think having two dining areas with the limited space is pretty stupid. A kitchenette parallel to the upper wall, below the window. The length is flexible there. A small corner up to the entrance to the storage room. At least one tall cabinet could go there. So a small L-shape, and thus extend the kitchen slightly into the living area at the top of the plan (depending on how much value the mother-in-law places on the kitchen). Dining table in the free space between the L and the kitchen door, and only one dining place. Possibly with an extendable tabletop and otherwise just a small table that doesn’t get in the way and is sufficient for one person.