Need some ideas

Went and did an estimate today for a shower rebuild. Current shower is 3x3. Other side of wall is a soaking tub and that area is about 7'x4'. Originally they wanted to do just the small shower, but then the wife said they would love to get rid of the soaking tub, build a shower with a bench in that area and put a closet were the 3x3 shower is. The problem is there is a half moon window about 5' off the floor, above the tub. The window can't be taken out since it's in a retirement community and they are restricted on changing the look of the outside of their houses. I was thinking about getting new trim for the window, removing the current paint on the inside jamb of the window and using a marine grade paint, but I'm not familiar with that type of paint. I want to make sure that the window is as waterproof as possible and get the bigger job. If the window was up higher then I would not be so worried and I don't think a curtain covering the window, when the shower is in use, will look too decorative.

1. Do they own this property condo style?
1. B Would such a modification be allowed?
2. How about a false-wall inside to cover the window while leaving it in tact?

Not a condo, a single family free standing home.
They can do whatever they want inside, just would have to jump through major hoops to do any kind of modification that would change the exterior of the actual house. They can add landscaping and stuff, just messing with the house itself is always a big problem. I was thinking frosting the glass so noone can see inside when they were taking a shower, but didn't think of a false wall. Frosting the window and then making a false wall is a great idea and might just work. I'll have to give them a call and run it by the boss, A. K. A Mrs. Homeowner .