Ive had a Mac 17, Mac 26c, South Shore 23, Ericson 25, and now Hunter 260. The MacGregor 17 is nice solid small boat.
I recommend just pressure spraying inside a couple times, and then pump out the water. Then paint with nice cheerful white paint and maybe paint a bit like 5% of the inside in light blue or light green. Nice paint done in half day makes things nicer.
Without headroom its hard to make it comfier. But really most of time is spent laying down, sleeping or resting or reading. Cushions thus may be best first step. You can buy a fleece sleeping bag liner and put a 2x6 piece of foam in it for instant rectangular cushion for the lower bunks.
Replacing wood is hard. Unless it crumbles under your weight just paint it!!!!!!!!!!!!!
Without headroom hard to make an area to sit upright.
You can buy a toilet seat that fits on a 5 gallon bucket, and then using 3 layers of garbage bags make a simple potty. I use a 3.5 gallon bucket which is nicely shorter and works great and I often leave off the toilet seat as unneeded.
Maybe buy a Jackery 240 to have electricity aboard. Maybe buy a nice cooler and get ice.
You can buy storage bins to let you slide them to the rear on the bunk berth seats.
GOOD LUCK. AGAIN WHITE PAINT ON THE INTERIOR CAN DO WONDERS!!