Sad In Crate

The crate is in the family room, is it okay if he snuggles with us on the floor or sleeps in our lap while we watch TV.  If we put him in the crate he seems so sad because he can see us.

We want the crate to be a place that he is comfortable sleeping, or playing when you are not available. Having the crate in a frequently used room is going to make it more difficult, consider moving it.
Letting him snuggle beside you or sleep in your lap is great as long as you have the opportunity to pick him up and get him to the designated elimination area quickly. The point is for you to have quick access to him when he is not in the crate.