C.S.
I would keep them in their room together, but maybe seperate the space. Maybe something like putting their beds on opposite walls & seperating spaces with dressers being put back to back. Add a noise machine to the room to muffle the younger ones noises so she doesn't wake & it may help him to stay asleep too. Maybe get a princess tent & make that be her own special area or something like that. My sister did this, she cleaned out the closet & decorated it up cute with storage on one side & toddler bed on the other and put her toddler in there and then the room was the older brothers space. she put all there clothes in a wardrobe & it really seemed to work for them. Once the toddler was big enough, she got a bunk bed & added more storage in the closet. I've seen some single parents take the bigger master bedroom & put both kids in there & they took the smaller room so there was more room to seperate the spaces out. best of luck. they always keep you thinking.