***neither a teacher nor a native-speaker***
He is outside the house.
The woman is by the fireplace.
But the sentence should be clearer if we rephrased as I'll write below;
The woman by the fireplace version;
He saw a pretty woman who was standing by the fireplace, through the window.
The man by the fireplace version;
He saw a pretty woman through the window, while he was standing by the fireplace.
- For Teachers