What about making the unused office your nursery? The baby won't care what the room looks like - you can push the unused stuff over against one wall.
Once the baby is old enough to be out of the crib, move her in with the child (not the 7 year old) who she meshes with the best. That's what I did with my younger son. Once he came out of the crib, I bought another twin bed and made an "L" out of it - one on one wall and the other on the other wall with one of them in the corner - and my sons shared the room. They loved it too. They shared a room for 5 years, until we moved again and I bought double beds because my older son was getting a bit too big for a twin!
I would NOT move your step-son. I would NOT put the baby in with him at all. He needs the MOST stable situation so that he will not become jealous of the baby. I think it would be best to keep the infant by herself once she leaves your bedroom. Little kids get very curious and "mess with" babies. Several cousins of cousins were so interested in my new baby that they kept going in to peek at him in the crib. I went in to check during dinner and one of the kids had put the blanket on top of his face. I cried so hard and could barely sit at the table, it scared me so bad. They were older than your 4 year old and I would have thought that they knew better. They were good kids, too. But still, it happened. I shudder to think that I might not have checked on him like I did.
Really and truly, your baby will not care one wit that she's not in a beautiful little room. Put her in the office.
Dawn