Yeah I would really stick with more classic names if I were you; Luke, Elliot, and Elizabeth are pretty classic. So from your list I would say Amelia, Grace, Phoebe (its not exactly classic, but I like the way it sounds with the others'), Annabel, Caitlin, Molly (again its not as classic as Elizabeth, but its a darling name and it sounds good with the others') and maybe Olivia (though its getting pretty trendy).
Ones I really don't recommend are Carmen and Niamh. I love Niamh, but people won't know how to pronounce her name just by reading it. Carmen is just... I don't know. I've never liked it; its just so harsh and completely unfeminine. Freya is really cool, but it seems out of nowhere when next to her older siblings. Ruby is so adorable, but its got a lot of spunk that stands out from the rest of the names. Jasmine seems out of nowhere compared to the older siblings', and I've always preferred Jessamine over Jasmine, but that still doesn't sound quite right with Luke, Elliot, or Elizabeth.
I actually think it'd be neat if you went with Molly or Phoebe; they sound great with Luke, Elliot, and Elizabeth, plus are less seen compared to Grace or Caitlin. Possible middle names to go with Molly: Grace, Annabel, Rose. Possible middle names to go with Phoebe: Grace, Amelia, Annabel, Olivia, Rose.
niftylavalamp - I really like Rebecca actually, but I'm not a fan of Gwendolyn, it sounds too harsh to me. I also like Nina from your suggestions. I don't care about popularity, I'd rather have a name that people know how to say and spell easily.
jennifer94 - I really like Amelia too
dame - My only concern with Annabel is it being too close to my own name (Hannah) but with the "bel" on the end I hope it will be distinct enough, what do you think?
roseymaam - I never thought about the nickname Livvy for Olivia, but it's definitely too close to Libby to use.
september - I like Victoria, but I wouldn't use the nickname Tori, I'm in the UK where it's another name for one of our political parties. I don't care much for Vicky either, but what other nicknames are there? I wouldn't use Margaret as it's my mum's name.
arial - I never noticed that theme before! I like Madeline a lot from your suggestions, also Eloise but I want to avoid "el" starting names. Matilda is really pretty, too. Libby and Tilly would be nice together, I think.
boyandgirl - I'm leaning towards Amelia from the original list I think.
liviajoan - We live in the UK where Niamh is pretty common, I don't think pronunciation would be an issue for us. We haven't thought about middle names yet, that's going to be another issue - Libby has a family middle from her mum's side, but my boys just have names that I and my ex liked at the time.
Like Livvie for Olivia, I find Tilly, Millie, etc too close to Libby with the short i and ends in ee sounds. I just keep thinking about calling one of them: "Libby, phone's for you" and they can't tell which one I called. I guess the same could be true of Ruby, Abby and Phoebe but it doesn't seem as strong to my ear since the short i isn't repeated too. I actually know sisters Abby and Libby and I think they're quite cute together.
Annabel - could be Annie which is darling - may be too close to Hannah, you might have to try it out
Amelia - maybe Mia instead of Milly?
Nina is a great suggestion (maybe Janine nn Nina if you like the nickname idea)
and I like Molly from your original list too.
While I understand why you call it "two families," I can see how this would be hurtful for the kids to hear/feel. The children may have more than one family - Mom's family and Dad's family, for example - but together with your partner and his child, you are one family.
For a sister for Luke, Elliot and Libby, I think Annabel is the best choice. Grace is my second choice and Amelia is my third choice. I like the nickname Belle for Annabel and Milly for Amelia.
I'd really like to advocate for Carmen. It's a fabulous name for a girl - beautiful, a very pretty sound, and one day when she is an adult, very sexy. I love the name Carmen but can't use it because it doesn't sound right with my surname.
I'd say no to:
Jasmine - I love this name. I love that it's the name of a gorgeous luscious flower that smells so good. I love the subtle sexiness of this name. Unfortunately, I can't get past a negative image that is associated with this name in my general area. Where I live, Jasmine is slightly "low class," which makes me sad. Also, I find this name a bit dated.
Ruby - Most Nameberries love it. I personally hate it.
Molly - Boring.
Freya - Too ethnic for me to recommend for someone not from that culture
Phoebe - Kind of nice, kind of nerdy
Niamh - No? This is a totally different style than all the other names suggested.
Caitlin - No - dated, overused, and boring.
Olivia - No - the future Caitlin.